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Minnesota Legislature

Office of the Revisor of Statutes

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

                              CHAPTER 5-H.F.No. 1 
                  An act relating to the financing and operation of 
                  government in this state; providing for payment of a 
                  sales tax rebate; providing for education finance; 
                  providing property tax reform; making changes to 
                  income, corporate franchise, sales and use, property, 
                  motor vehicle sales, motor vehicle registration, 
                  mortgage registry, deed, insurance premiums, 
                  MinnesotaCare, motor fuels, cigarette and tobacco, 
                  liquor, lawful gambling, minerals, estate, and special 
                  taxes; changing and allowing tax credits, 
                  subtractions, and exemptions; conforming with changes 
                  in federal income tax provisions; providing for 
                  allocation of income; changing property tax valuation, 
                  assessment, levy, classification, credit, aid, 
                  homestead, exemption, review, appeal, and distribution 
                  provisions; imposing a state property tax levy on 
                  certain property and providing for use of the 
                  proceeds; providing a property tax homestead credit; 
                  imposing levy limits; changing certain property tax 
                  notice and hearing provisions and authorizing waivers; 
                  abolishing certain tax levies for metropolitan 
                  transit, establishing a transit fund, and dedicating 
                  certain tax proceeds to the fund; providing for local 
                  government aids; changing certain provisions relating 
                  to biomass facilities; providing for utility 
                  pass-through of certain property tax reductions; 
                  allowing utility rate adjustments for lowering 
                  emissions; providing for uniform sales and use tax 
                  administration; providing for taxation and incentive 
                  payments on forest lands; providing for state takeover 
                  of certain costs of district court administration and 
                  out-of-home placements; reducing taconite production 
                  tax rates and providing for state aid; providing for 
                  the distribution of certain taconite production tax 
                  payments; providing for electronic filing and payment 
                  of taxes; changing procedures for disposition of 
                  seized contraband; changing tax increment financing 
                  provisions; providing for biomedical innovation 
                  initiative grants; changing budget reserve provisions; 
                  providing for payments in lieu of taxes; changing 
                  provisions relating to property tax refunds; 
                  authorizing special taxing districts; changing and 
                  clarifying tax administration, collection, 
                  enforcement, interest, and penalty provisions; 
                  transferring administration and enforcement of the 
                  Unfair Cigarette Sales Act from the commissioner of 
                  revenue to the commissioner of commerce; changing 
                  revenue recapture provisions; authorizing abatements 
                  and waivers of fees and certain taxes in disaster 
                  areas; changing and imposing fees; changing debt 
                  collection provisions for student loans; providing 
                  certain powers to certain political subdivisions; 
                  providing certain duties and powers to the 
                  commissioner of revenue; authorizing publication of 
                  names of certain delinquent taxpayers; authorizing 
                  border city allocations; changing provisions relating 
                  to tax-forfeited lands and providing for tax-forfeited 
                  lands transfers; defining a lottery and other terms; 
                  classifying data; requiring studies and reports; 
                  imposing penalties; appropriating money; amending 
                  Minnesota Statutes 2000, sections 16A.152, 
                  subdivisions 1a, 2; 16D.08, subdivision 2; 45.011, 
                  subdivision 1; 69.021, subdivision 5; 84.922, by 
                  adding a subdivision; 88.49, subdivisions 5, 9a; 
                  88.491, subdivision 2; 97A.065, subdivision 2, as 
                  amended; 103D.905, subdivision 3; 115B.24, subdivision 
                  2; 116J.424; 123A.45, subdivisions 2, 6; 123B.42, 
                  subdivision 3; 123B.53, subdivisions 2, 4, 5; 123B.54; 
                  123B.75, subdivision 5; 123B.92, subdivision 9; 
                  126C.01, subdivision 3; 126C.10, subdivisions 1, 2; 
                  126C.13, subdivision 4; 126C.17, subdivisions 1, 2, 5, 
                  6, 7, 8, by adding subdivisions; 126C.21, subdivision 
                  4; 126C.48, subdivision 8; 126C.63, subdivision 8; 
                  126C.69, subdivisions 2, 3, 9, 12, 15; 144.3831, 
                  subdivision 2; 168.013, subdivision 1a; 168.017, 
                  subdivision 3; 174.24, subdivision 3b; 179A.101, 
                  subdivision 1; 179A.102, subdivision 6; 179A.103, 
                  subdivision 1; 216B.2424, subdivision 5; 239.101, 
                  subdivision 3; 256L.02, subdivision 3; 270.06; 270.07, 
                  subdivision 3, by adding a subdivision; 270.271, 
                  subdivisions 1, 3; 270.60, by adding a subdivision; 
                  270.70, subdivision 13; 270.73, subdivision 1; 
                  270.771; 270.78; 270A.03, subdivisions 5, 7; 270A.11; 
                  270B.02, subdivisions 2, 3; 270B.03, subdivision 6; 
                  271.01, subdivision 5; 271.21, subdivision 2; 272.02, 
                  subdivisions 10, 22, by adding subdivisions; 273.061, 
                  subdivisions 1, 2; 273.072, subdivision 1; 273.11, 
                  subdivisions 1a, 14, by adding subdivisions; 273.1104, 
                  subdivision 2; 273.111, subdivision 4; 273.121; 
                  273.124, subdivisions 1, 8, 11, 13, 14; 273.13, 
                  subdivisions 22, 23, 24, 25, 31; 273.134; 273.135, 
                  subdivisions 1, 2; 273.136, subdivision 2; 273.1391, 
                  subdivisions 2, 3; 273.1392; 273.1393; 273.1398, 
                  subdivision 4a, by adding subdivisions; 273.166, 
                  subdivisions 2, 3, 5; 273.42, by adding a subdivision; 
                  274.01, subdivision 1; 274.13, subdivision 1; 275.02; 
                  275.065, subdivisions 3, 5a, 6; 275.066; 275.07, 
                  subdivision 1; 275.16; 275.28, subdivision 1; 275.61; 
                  275.62, subdivision 1; 275.70, subdivision 5, by 
                  adding subdivisions; 276.04, subdivision 2; 276.11, 
                  subdivision 1; 276A.01, subdivisions 2, 3; 276A.06, 
                  subdivision 3; 281.17; 282.01, subdivisions 1, 1b, 1c, 
                  1d, 1e; 282.04, subdivision 2; 282.241; 287.035; 
                  287.04; 287.08; 287.12; 287.13, by adding a 
                  subdivision; 287.20, subdivisions 2, 9; 287.21, 
                  subdivision 1; 287.28; 289A.02, subdivision 7, by 
                  adding a subdivision; 289A.12, subdivision 3; 289A.18, 
                  subdivision 4, as amended; 289A.20, subdivisions 1, 2, 
                  4; 289A.26, subdivision 2a; 289A.31, subdivision 7; 
                  289A.50, subdivisions 2, 2a; 289A.55, subdivision 9; 
                  289A.60, subdivisions 1, 2, 7, 21, as amended, by 
                  adding a subdivision; 290.01, subdivisions 6b, 7, 19, 
                  19b, 19c, 19d, 22, 29, 31, by adding a subdivision; 
                  290.014, subdivision 5; 290.05, subdivision 1; 290.06, 
                  subdivisions 2c, 22, 23; 290.067, subdivisions 2, 2b; 
                  290.0671, subdivisions 1, 1a, 7; 290.0674, subdivision 
                  1; 290.0675, subdivisions 1, 3; 290.091, subdivision 
                  2; 290.0921, subdivisions 1, 2, 3, 6; 290.0922, 
                  subdivision 2; 290.093; 290.095, subdivision 2; 
                  290.17, subdivisions 1, 4; 290.191, subdivision 2; 
                  290.21, subdivision 4; 290.92, subdivision 23; 
                  290.9725; 290A.03, subdivisions 6, 12, 13, 15; 
                  290A.04, subdivisions 2, 2a, 2h, 4; 290A.15; 291.005, 
                  subdivision 1; 295.50, subdivisions 3, 4, 15; 295.52, 
                  subdivisions 4, 7; 295.55, subdivision 4; 295.57, 
                  subdivision 1; 296A.07, subdivision 4; 296A.08, 
                  subdivision 3; 296A.15, subdivisions 1, 7; 296A.16, 
                  subdivision 2; 296A.21, subdivisions 1, 4; 296A.24, 
                  subdivisions 1, 2; 297A.01, subdivision 5; 297A.07, 
                  subdivision 3; 297A.25, subdivisions 3, 11, 28; 
                  297A.61, subdivisions 2, 3, 4, 6, 7, 9, 10, 12, 14, 
                  17, 19, 22, 23, by adding subdivisions; 297A.64, 
                  subdivisions 3, 4; 297A.66, subdivisions 1, 3; 
                  297A.67, subdivisions 2, 8, 23, 24, 25, by adding 
                  subdivisions; 297A.68, subdivisions 2, 3, 5, 11, 13, 
                  14, 18, 19, 25, by adding a subdivision; 297A.69, 
                  subdivision 2; 297A.70, subdivisions 1, 2, 3, 4, 7, 8, 
                  10, 13, 14; 297A.71, subdivision 6, by adding 
                  subdivisions; 297A.72, subdivision 1; 297A.75; 
                  297A.77, subdivision 1; 297A.80; 297A.82, subdivision 
                  3, by adding a subdivision; 297A.86, subdivision 1; 
                  297A.89, subdivision 1; 297A.90, subdivision 1; 
                  297A.91; 297A.92, subdivision 2; 297A.94, as amended; 
                  297A.99, subdivisions 7, 9, 11; 297B.03; 297B.09, 
                  subdivision 1; 297E.02, subdivision 4; 297E.16, 
                  subdivisions 1, 2; 297F.04, subdivision 1; 297F.09, 
                  subdivision 7; 297F.13, subdivision 4; 297F.16, 
                  subdivision 4; 297F.20, subdivision 3; 297F.21, 
                  subdivisions 1, 2, 3; 297G.09, subdivision 6; 297G.15, 
                  subdivision 4; 297G.16, subdivisions 5, 7; 297G.20, 
                  subdivisions 3, 4; 297H.04, by adding a subdivision; 
                  297H.06, by adding a subdivision; 297I.05, subdivision 
                  5; 297I.20; 297I.35, subdivision 2; 297I.40, 
                  subdivisions 1, 2, 7; 297I.85, subdivision 7; 298.01, 
                  subdivisions 3b, 4c; 298.018, subdivisions 1, 2; 
                  298.17; 298.22, subdivision 2, by adding a 
                  subdivision; 298.2211, subdivision 2; 298.2213, 
                  subdivision 3; 298.2214, subdivision 1; 298.223, 
                  subdivision 1; 298.225, subdivision 1; 298.227; 
                  298.24, subdivision 1; 298.28, subdivisions 3, 4, 6, 
                  7, 9a, 10; 298.282, subdivision 1; 282.292, 
                  subdivision 2; 298.293; 298.296, subdivision 2; 
                  298.2961; 298.298; 298.75, subdivisions 1, 2; 299D.03, 
                  subdivision 5; 325D.33, subdivision 8, by adding a 
                  subdivision; 325D.405; 325D.415; 345.41; 349.19, 
                  subdivision 2a; 357.021, subdivision 1a; 383A.80, 
                  subdivision 1; 383B.80, subdivision 1; 461.12, by 
                  adding a subdivision; 469.040, subdivision 5; 469.169, 
                  by adding a subdivision; 469.1732, subdivision 1; 
                  469.174, subdivisions 3, 10, 10a, 12; 469.175, 
                  subdivisions 1, 6b, by adding a subdivision; 469.176, 
                  subdivisions 1b, 1e, 3, 4g, by adding subdivisions; 
                  469.1763, subdivision 6; 469.177, subdivisions 1, 11, 
                  by adding a subdivision; 469.1771, subdivision 1; 
                  469.178, by adding a subdivision; 469.1812, 
                  subdivision 2; 469.1813, subdivision 6; 469.1814, by 
                  adding a subdivision; 469.202, subdivision 2; 469.303; 
                  471.58; 473.388, subdivisions 4, 7; 473.446, 
                  subdivision 1; 473.843, subdivision 3; 473F.08, 
                  subdivision 3; 475.53, subdivision 4; 475.58, 
                  subdivision 1, as amended; 477A.011, subdivisions 35, 
                  36; 477A.013, subdivisions 1, 9; 477A.03, subdivision 
                  2; 477A.12; 477A.14; 480.181, subdivision 1; 487.33, 
                  subdivision 5; 488A.03, by adding a subdivision; 
                  488A.20, by adding a subdivision; 574.34, subdivision 
                  1; 609.75, subdivision 1; Laws 1986, chapter 396, 
                  section 5; Laws 1992, chapter 499, article 7, section 
                  31, as amended; Laws 1997, chapter 231, article 1, 
                  section 19, subdivision 3, as amended; Laws 1997, 
                  chapter 231, article 1, section 22; Laws 1998, chapter 
                  389, article 16, section 35, subdivision 1; Laws 1999, 
                  chapter 243, article 4, section 19; Laws 2000, chapter 
                  479, article 2, section 1; Laws 2000, chapter 490, 
                  article 8, section 17; Laws 2000, chapter 490, article 
                  11, section 26; proposing coding for new law in 
                  Minnesota Statutes, chapters 12; 16A; 103B; 116J; 
                  126C; 174; 216B; 270; 272; 273; 275; 290; 295; 296A; 
                  297A; 297F; 297H; 383A; 469; 471; 477A; 480; 484; 
                  proposing coding for new law as Minnesota Statutes, 
                  chapters 144F; 290C; repealing Minnesota Statutes 
                  2000, sections 16A.1521; 16A.76; 126C.10, subdivisions 
                  9, 10, 11, 12, 19, 20, 21, 22; 126C.11; 126C.13, 
                  subdivisions 1, 2, 3; 126C.30; 126C.31; 126C.32; 
                  126C.33; 126C.34; 126C.35; 126C.36; 270.31; 270.32; 
                  270.33; 270.34; 270.35; 270.36; 270.37; 270.38; 
                  270.39; 273.126; 273.13, subdivision 24a; 273.1382; 
                  273.1399; 275.078; 275.08, subdivision 1e; 289A.60, 
                  subdivisions 3, 15; 290.06, subdivisions 25, 26; 
                  290.0673; 290.095, subdivisions 1a, 7; 290.21, 
                  subdivision 3; 290.23; 290.25; 290.31, subdivisions 2, 
                  2a, 3, 4, 5, 19; 290.35; 290.9726, subdivision 7; 
                  290A.04, subdivision 2j; 296A.16, subdivision 6; 
                  296A.24, subdivision 3; 297A.61, subdivision 16; 
                  297A.62, subdivision 2; 297A.64, subdivision 1; 
                  297A.68, subdivision 21; 297A.71, subdivisions 2, 15, 
                  16; 297B.032; 297E.16, subdivision 3; 297F.21, 
                  subdivision 4; 297G.20, subdivision 5; 297I.05, 
                  subdivision 8; 297I.30, subdivision 3; 325D.33, 
                  subdivision 5; 462A.071; 469.1732, subdivision 2; 
                  469.1734, subdivision 4; 469.1782, subdivision 1; 
                  473.3915; 473.446, subdivisions 1a, 1b; Laws 1988, 
                  chapter 426, section 1; Laws 1988, chapter 702, 
                  section 16; Laws 1992, chapter 511, article 2, section 
                  52, as amended; Laws 1996, chapter 471, article 8, 
                  section 45; Laws 1999, chapter 243, article 6, 
                  sections 14, 15; Laws 2000, chapter 490, article 6, 
                  section 17; Minnesota Rules, parts 8120.0200; 
                  8120.0500; 8120.0700; 8120.0900; 8120.1300; 8120.1600; 
                  8120.2000; 8120.2100; 8120.2200; 8120.2300; 8120.2500; 
                  8120.2700; 8120.2800; 8120.3000; 8120.3200; 8120.4300; 
                  8120.4400; 8120.4500; 8120.4600; 8120.4900; 8120.5000; 
                  8120.5100; 8120.5300. 
           
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1 
                                     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 1999. 
           (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 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.] 
           Subdivision 1.  [ELIGIBILITY; REBATE BASED ON INCOME.] An 
        individual who was a resident of Minnesota for any part of 1999, 
        and filed a 1999 Minnesota income tax return on or before 
        November 30, 2001, and had a tax liability before refundable 
        credits on that return of at least $1 and who was not allowed to 
        be claimed as a dependent on a 1999 federal income tax return 
        filed by another person is eligible for a sales tax rebate based 
        on income under either subdivision 2 or 3. 
           Subd. 2.  [MARRIED JOINT AND HEAD OF HOUSEHOLD FILERS.] The 
        sales tax rebate for taxpayers who qualify under subdivision 1 
        and are married filing joint or head of household filers is 
        computed according to the following schedule: 
             Income                                Sales Tax Rebate
         less than $2,500                                $233
         at least $2,500 but less than $5,000            $289
         at least $5,000 but less than $10,000           $303
         at least $10,000 but less than $15,000          $334
         at least $15,000 but less than $20,000          $379
         at least $20,000 but less than $25,000          $409
         at least $25,000 but less than $30,000          $436
         at least $30,000 but less than $35,000          $474
         at least $35,000 but less than $40,000          $516
         at least $40,000 but less than $45,000          $560
         at least $45,000 but less than $50,000          $595
         at least $50,000 but less than $60,000          $609
         at least $60,000 but less than $70,000          $636
         at least $70,000 but less than $80,000          $692
         at least $80,000 but less than $90,000          $748
         at least $90,000 but less than $100,000         $809
         at least $100,000 but less than $120,000        $877
         at least $120,000 but less than $140,000        $960
         at least $140,000 but less than $160,000      $1,038
         at least $160,000 but less than $180,000      $1,111
         at least $180,000 but less than $200,000      $1,181
         at least $200,000 but less than $400,000      $1,510
         at least $400,000 but less than $600,000      $1,987
         at least $600,000 but less than $800,000      $2,384
         at least $800,000 but less than $1,000,000    $2,733
         $1,000,000 and over                           $3,250
           Subd. 3.  [SINGLE AND MARRIED SEPARATE FILERS.] The sales 
        tax rebate for individuals who qualify under subdivision 1 as 
        single or married filing separately must be computed according 
        to the following schedule: 
             Income                                Sales Tax Rebate
         less than $2,500                               $118
         at least $2,500 but less than $5,000           $124
         at least $5,000 but less than $10,000          $165
         at least $10,000 but less than $15,000         $196
         at least $15,000 but less than $20,000         $227
         at least $20,000 but less than $25,000         $253
         at least $25,000 but less than $30,000         $305
         at least $30,000 but less than $40,000         $329
         at least $40,000 but less than $50,000         $363
         at least $50,000 but less than $70,000         $465
         at least $70,000 but less than $100,000        $644
         at least $100,000 but less than $140,000       $776
         at least $140,000 but less than $200,000       $937
         at least $200,000 but less than $400,000     $1,270
         $400,000 and over                            $1,625
           Subd. 4.  [NONRESIDENTS.] Individuals who were not 
        residents of Minnesota for any part of 1999 and who paid more 
        than $10 in Minnesota sales tax under Minnesota Statutes, 
        chapter 297A, on nonbusiness consumer purchases in that year 
        qualify for a rebate under this subdivision only.  Qualifying 
        nonresidents must file a claim for rebate on a form prescribed 
        by the commissioner by November 30, 2001.  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) 40.45 percent of that amount; or 
           (2) the maximum amount for which the claimant would have 
        been eligible as determined under subdivision 2 if the taxpayer 
        filed the 1999 federal income tax return as a married taxpayer 
        filing jointly or head of household, or as determined under 
        subdivision 3 for other taxpayers. 
           Subd. 5.  [DEFINITION OF INCOME.] "Income," for purposes of 
        this section other than subdivision 4, is taxable income as 
        defined in section 63 of the Internal Revenue Code of 1986, as 
        amended through December 31, 1998, 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 1999 income tax return, including subsequent 
        adjustments to that return made within the time limits specified 
        in subdivision 12.  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 subdivision 2 or 3 
        multiplied by the percentage determined pursuant to Minnesota 
        Statutes, section 290.06, subdivision 2c, paragraph (e), as 
        calculated on the original 1999 income tax return, including 
        subsequent adjustments to that return made within the time 
        limits specified in subdivision 12.  For purposes of subdivision 
        4, "income" is taxable income as defined in section 63 of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1998, and reported on the taxpayer's original federal tax return 
        for the first taxable year beginning after December 31, 1998. 
           Subd. 6.  [SOCIAL SECURITY AND PUBLIC PENSION 
        RECIPIENTS.] (a) An individual qualifies for a rebate of $118 
        under this subdivision if the individual: 
           (1) was a resident of Minnesota for all of calendar year 
        1999; 
           (2) is not eligible for a rebate under subdivision 9; 
           (3) attained the age of 18 on or before December 31, 1999; 
        and 
           (4)(i) received social security benefits as defined in 
        section 86(d)(1) of the Internal Revenue Code of 1986, as 
        amended through December 31, 2000, in calendar year 1999; or 
           (ii) received federal, state or local public pension or 
        disability benefits in calendar year 1999. 
           (b) An individual or married couple who qualifies for a 
        rebate under both this subdivision and subdivision 1 is eligible 
        for the rebate under whichever subdivision provides a larger 
        amount. 
           (c) If the Social Security Administration, Railroad 
        Retirement Board, or the administrator of a public pension is 
        paying benefits to a recipient by electronic funds transfers in 
        calendar year 2001, the commissioner may pay the rebate under 
        this subdivision through electronic funds transfer to the same 
        financial institution and into the same account into which those 
        benefits are transferred in calendar year 2001. 
           (d) For purposes of this subdivision, "public pension plan 
        administrator" means (1) a state and local public pension 
        administrator, (2) the federal Civil Service Retirement System, 
        (3) the United States Department of Defense for the military 
        retirement and survivors benefit programs, and (4) the Federal 
        Employees Retirement System. 
           (e) A state and local public pension administrator is an 
        entity paying benefits under a pension plan enumerated in 
        Minnesota Statutes, section 356.20, subdivision 2.  Each state 
        and local pension administrator shall provide to the 
        commissioner of revenue, in a form the commissioner prescribes, 
        a list of individuals to whom it pays benefits that meet the 
        requirements of paragraph (a), clauses (1) and (3). 
           Subd. 7.  [DEPENDENTS.] An individual who: 
           (1) was allowed to be claimed as a dependent on a 1999 
        federal income tax return filed by another person; 
           (2) would have otherwise been eligible for a rebate under 
        subdivision 1; 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 subdivision only.  The 
        rebate under this subdivision equals 35 percent of the amount 
        allowed under the schedule in subdivision 3 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 subdivision multiplied 
        by the percentage determined pursuant to Minnesota Statutes, 
        section 290.06, subdivision 2c, paragraph (e), as calculated on 
        the original 1999 income tax return. 
           Subd. 8.  [CREDIT RECIPIENTS.] An individual who 
           (1) was a resident of Minnesota for any part of 1999; 
           (2) was not eligible for a rebate under subdivision 1, 6, 
        or 9; 
           (3) was not allowed to be claimed as a dependent on a 1999 
        federal income tax return by another person; and 
           (4)(i) claimed and was eligible for a refund under 
        Minnesota Statutes, chapter 290A, for property taxes paid in 
        2000 or rent constituting property taxes paid in 1999 on or 
        before November 30, 2001; or 
           (ii) filed 1999 Minnesota and federal income tax returns 
        before November 30, 2001, in order to 
           (A) claim a credit under Minnesota Statutes, section 
        290.067, 290.0671, or 290.0674; 
           (B) claim a refund of withheld taxes; or 
           (C) claim a refund of estimated taxes, 
        is eligible for a rebate under this subdivision only.  For 
        married couples filing joint returns and heads of households, 
        the rebate equals the minimum amount in subdivision 2.  For 
        single filers and married individuals filing separate returns, 
        the rebate equals the minimum amount in subdivision 3.  For 
        individuals who qualify for a rebate under clause (4)(i), the 
        rebate equals the minimum amount in subdivision 3 unless the 
        property tax refund return is a joint return and neither of the 
        joint filers qualifies for a rebate under any of the other 
        rebate criteria in which case the rebate equals the minimum 
        amount in subdivision 2.  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 subdivision multiplied 
        by the percentage determined under Minnesota Statutes, section 
        290.06, subdivision 2c, paragraph (e), as calculated on the 
        original 1999 income tax return.  Notwithstanding the provisions 
        of Minnesota Statutes, section 289A.60, subdivision 12, an 
        individual who files a property tax refund claim for property 
        taxes paid in 2000 or rent constituting property taxes paid in 
        1999 after August 15, 2001, and before November 30, 2001, is 
        eligible for a refund under Minnesota Statutes, chapter 290A, 
        and a rebate under this subdivision. 
           Subd. 9.  [CLAIMS BASED ON FEDERAL LIABILITIES.] An 
        individual who: 
           (1) was a resident of Minnesota for any part of 1999; 
           (2) filed 1999 Minnesota and federal income tax returns on 
        or before November 30, 2001; 
           (3) had federal taxable income on the federal return of at 
        least $5; and 
           (4) does not qualify for a rebate under subdivision 1 or 7, 
        is eligible for a rebate under this subdivision only. 
        An individual who was allowed to be claimed as a dependent on a 
        1999 federal income tax return filed by another person is 
        eligible for a rebate under this subdivision only if the 
        individual had in 1999 earned income as defined in section 
        32(c)(2)(A)(i) of the Internal Revenue Code; the rebate of a 
        dependent eligible for a rebate under this subdivision equals 35 
        percent of the amount allowed under the schedule in subdivision 
        3 based on the individual's income.  For all other individuals 
        who qualify under this subdivision, the rebate equals the amount 
        allowed based on the individual's income under the schedule in 
        subdivision 2 for married couples filing joint returns and heads 
        of household and the amount allowed based on the individual's 
        income under the schedule in subdivision 3 for single filers and 
        married individuals filing separately; provided, however, that 
        any rebate payable under this subdivision to an individual who 
        was a part-year resident of Minnesota in 1999 must be prorated 
        according to the formula applicable to part-year residents in 
        subdivision 5. 
           Subd. 10.  [FISCAL YEAR TAXPAYERS.] For a fiscal year 
        taxpayer, the dates in subdivisions 1 through 4 are extended one 
        month for each month in calendar year 1999 that occurred prior 
        to the start of the individual's 1999 fiscal tax year. 
           Subd. 11.  [PAYMENT DATES; INTEREST.] The commissioner of 
        revenue may begin paying sales tax rebates by July 1, 2001. 
        Sales tax rebates not paid by January 1, 2002, bear interest at 
        the rate specified in Minnesota Statutes, section 270.75. 
           Subd. 12.  [NO ADJUSTMENTS AFTER PROCESSING.] A sales tax 
        rebate may not be adjusted based on changes to a 1999 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. 
           Subd. 13.  [JOINT REBATE RULES.] Individuals who filed a 
        joint income tax return for 1999 must 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 1999 income tax return are living at 
        separate addresses, as indicated on their 2000 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. 
           Subd. 14.  [DECEASED INDIVIDUALS.] 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. 
           Subd. 15.  [APPLICATION OF OTHER LAW.] (a) The sales tax 
        rebate is a "Minnesota tax law" for purposes of Minnesota 
        Statutes, section 270B.01, subdivision 8. 
           (b) 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 
        subdivision, a joint sales tax rebate is payable to each spouse 
        equally. 
           (c) 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. 
           Subd. 16.  [LAPSE OF ENTITLEMENT.] If the commissioner of 
        revenue cannot locate an individual entitled to a sales tax 
        rebate by July 1, 2003, or if an individual to whom a sales tax 
        rebate was issued has not cashed the check by July 1, 2003, the 
        right to the sales tax rebate lapses and the check must be 
        deposited in the general fund. 
           Subd. 17.  [CLAIMS FOR UNPAID REBATES.] Individuals 
        entitled to a sales tax rebate pursuant to subdivision 1, 6, 7, 
        8, or 9 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, 2002, 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. 
           Subd. 18.  [APPROPRIATION.] The rebate is a reduction of 
        fiscal year 2001 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 2001 and is available until June 30, 2003.
           Subd. 19.  [ILLEGALLY CASHED CHECKS.] 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. 
           Subd. 20.  [AUTHORITY TO CONTRACT WITH VENDOR.] 
        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. 
           Subd. 21.  [ELECTRONIC PAYMENT.] The commissioner may pay 
        rebates required by this section by electronic funds transfer to 
        individuals who requested that their 2000 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 
        2000 individual income tax refund. 
           Subd. 22.  [ADJUSTMENTS.] A sales tax rebate of 
        $852,080,000 is authorized for fiscal year 2001.  Before 
        payment, the commissioner of revenue shall adjust the rebate as 
        follows: 
           (1) the rebates calculated in subdivisions 2, 3, 4, 6, 7, 
        8, and 9 must be proportionately reduced to account for 1999 
        income tax returns that are filed on or after January 1, 2001, 
        but before June 1, 2001, so that the estimated amount of sales 
        tax rebates payable under subdivisions 2, 3, 4, 6, 7, 8, and 9 
        on the date the rebate is processed does not exceed the total 
        amount available for the rebate; and 
           (2) the commissioner of finance shall certify by July 15, 
        2001, the preliminary fiscal 2001 general fund net nondedicated 
        revenues.  If certified net nondedicated revenues are less than 
        the amount forecast in February 2001, the commissioner of 
        revenue shall proportionally decrease all rebates under this 
        section to rebate the entire amount of the certified net 
        nondedicated revenues.  The adjustments under this subdivision 
        are not a rule subject to Minnesota Statutes, chapter 14. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 3.  [APPROPRIATIONS.] 
           (a) $1,750,000 is appropriated in fiscal year 2001 from the 
        general fund to the commissioner of revenue to administer the 
        sales tax rebates in section 2.  Any unencumbered balance 
        remaining on June 30, 2001, does not cancel but is available for 
        expenditure by the commissioner of revenue until June 30, 2002.  
        Notwithstanding Minnesota Statutes, section 16A.285, the 
        commissioner of revenue may not use this appropriation for any 
        purpose other than administering the sales tax rebates.  This is 
        a one-time appropriation and may not be added to the agency's 
        budget base. 
           (b) $401,000 is appropriated in fiscal year 2001 from the 
        general fund to the state treasurer to pay the cost of clearing 
        sales tax rebate checks through commercial banks.  Any 
        unencumbered balance remaining on June 30, 2001, does not cancel 
        but is available for expenditure by the state treasurer until 
        June 30, 2002.  Notwithstanding Minnesota Statutes, section 
        16A.285, the state treasurer may not use this appropriation for 
        any purpose other than paying the cost of clearing rebate checks.
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 

                                   ARTICLE 2 
                               EDUCATION FINANCE 
           Section 1.  Minnesota Statutes 2000, section 123B.42, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COST; LIMITATION.] (a) The cost per pupil of the 
        textbooks, individualized instructional or cooperative learning 
        materials, and standardized tests provided for in this section 
        for each school year must not exceed the statewide average 
        expenditure per pupil, adjusted pursuant to clause (b), by the 
        Minnesota public elementary and secondary schools for textbooks, 
        individualized instructional materials and standardized tests as 
        computed and established by the department by March February 1 
        of the preceding school year from the most recent public school 
        year data then available. 
           (b) The cost computed in clause (a) shall be increased by 
        an inflation adjustment equal to the percent of increase in the 
        formula allowance, pursuant to section 126C.10, subdivision 2, 
        from the second preceding school year to the current school year.
        Notwithstanding the amount of the formula allowance for fiscal 
        years 2003 and 2004 in section 126C.10, subdivision 2, the 
        commissioner shall use the amount of the formula allowance for 
        the current year minus $415 in determining the inflation 
        adjustment for those fiscal years. 
           (c) The commissioner shall allot to the districts or 
        intermediary service areas the total cost for each school year 
        of providing or loaning the textbooks, individualized 
        instructional or cooperative learning materials, and 
        standardized tests for the pupils in each nonpublic school.  The 
        allotment shall not exceed the product of the statewide average 
        expenditure per pupil, according to clause (a), adjusted 
        pursuant to clause (b), multiplied by the number of nonpublic 
        school pupils who make requests pursuant to this section and who 
        are enrolled as of September 15 of the current school year. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 2.  Minnesota Statutes 2000, section 123B.53, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ELIGIBILITY.] (a) The following portions of a 
        district's debt service levy qualify for debt service 
        equalization: 
           (1) debt service for repayment of principal and interest on 
        bonds issued before July 2, 1992; 
           (2) debt service for bonds refinanced after July 1, 1992, 
        if the bond schedule has been approved by the commissioner and, 
        if necessary, adjusted to reflect a 20-year maturity schedule; 
        and 
           (3) debt service for bonds issued after July 1, 1992, for 
        construction projects that have received a positive review and 
        comment according to section 123B.71, if the commissioner has 
        determined that the district has met the criteria under section 
        126C.69, subdivision 3, except section 126C.69, subdivision 3, 
        paragraph (a), clause (2), and if the bond schedule has been 
        approved by the commissioner and, if necessary, adjusted to 
        reflect a 20-year maturity schedule. 
           (b) The criterion described in section 126C.69, subdivision 
        3, paragraph (a), clause (9), does not apply to bonds authorized 
        by elections held before July 1, 1992. 
           (c) For the purpose of this subdivision the department 
        shall determine the eligibility for sparsity at the location of 
        the new facility, or the site of the new facility closest to the 
        nearest operating school if there is more than one new facility. 
           (d) Notwithstanding paragraphs (a) to (c), debt service for 
        repayment of principal and interest on bonds issued after July 
        1, 1997, does not qualify for debt service equalization aid 
        unless the primary purpose of the facility is to serve students 
        in kindergarten through grade 12. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 3.  Minnesota Statutes 2000, section 123B.53, 
        subdivision 4, is amended to read: 
           Subd. 4.  [DEBT SERVICE EQUALIZATION REVENUE.] (a) The debt 
        service equalization revenue of a district equals the sum of the 
        first tier debt service equalization revenue and the second tier 
        debt service equalization revenue. 
           (b) The first tier debt service equalization revenue of a 
        district equals the greater of zero or the eligible debt service 
        revenue minus the amount raised by a levy of 12 15 percent times 
        the adjusted net tax capacity of the district minus the second 
        tier debt service equalization revenue of the district. 
           (c) The second tier debt service equalization revenue of a 
        district equals the greater of zero or the eligible debt service 
        revenue minus the amount raised by a levy of 25 percent times 
        the adjusted net tax capacity of the district. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 4.  Minnesota Statutes 2000, section 123B.53, 
        subdivision 5, is amended to read: 
           Subd. 5.  [EQUALIZED DEBT SERVICE LEVY.] To obtain debt 
        service equalization revenue, a district must levy an amount not 
        to exceed the district's debt service equalization revenue (a) 
        The equalized debt service levy of a district equals the sum of 
        the first tier equalized debt service levy and the second tier 
        equalized debt service levy. 
           (b) A district's first tier equalized debt service levy 
        equals the district's first tier debt service equalization 
        revenue times the lesser of one or the ratio of: 
           (1) the quotient derived by dividing the adjusted net tax 
        capacity of the district for the year before the year the levy 
        is certified by the adjusted pupil units in the district for the 
        school year ending in the year prior to the year the levy is 
        certified; to 
           (2) $4,000 $3,200. 
           (c) A district's second tier equalized debt service levy 
        equals the district's second tier debt service equalization 
        revenue times the lesser of one or the ratio of: 
           (1) the quotient derived by dividing the adjusted net tax 
        capacity of the district for the year before the year the levy 
        is certified by the adjusted pupil units in the district for the 
        school year ending in the year prior to the year the levy is 
        certified; to 
           (2) $8,000. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and revenue in fiscal year 2003, and thereafter. 
           Sec. 5.  Minnesota Statutes 2000, section 123B.54, is 
        amended to read: 
           123B.54 [DEBT SERVICE APPROPRIATION.] 
           (a) $33,141,000 in fiscal year 2000, $29,400,000 in fiscal 
        year 2001, $26,934,000 in fiscal year 2002, and $24,540,000 in 
        fiscal year 2003 and each year thereafter is $31,787,000 in 
        fiscal year 2004 and $26,453,000 in fiscal years 2005 and later 
        are appropriated from the general fund to the commissioner of 
        children, families, and learning for payment of debt service 
        equalization aid under section 123B.53.  
           (b) The appropriations in paragraph (a) must be reduced by 
        the amount of any money specifically appropriated for the same 
        purpose in any year from any state fund. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 6.  Minnesota Statutes 2000, section 123B.75, 
        subdivision 5, is amended to read: 
           Subd. 5.  [LEVY RECOGNITION.] (a) "School district tax 
        settlement revenue" means the current, delinquent, and 
        manufactured home property tax receipts collected by the county 
        and distributed to the school district. 
           (b) In June of each year 2001, the school district must 
        recognize as revenue, in the fund for which the levy was made, 
        the lesser of:  
           (1) the sum of May, June, and July school district tax 
        settlement revenue received in that calendar year plus general 
        education aid according to section 126C.13, subdivision 4, 
        received in July and August of that calendar year; or 
           (2) the sum of: 
           (i) 31 percent of the referendum levy certified in the 
        prior calendar year according to section 126C.17, subdivision 9; 
        plus 
           (ii) the entire amount of the levy certified in the prior 
        calendar year according to sections 124D.86, subdivision 4, for 
        school districts receiving revenue under 124D.86, subdivision 3, 
        clauses (1), (2), and (3); 126C.41, subdivisions 1, 2, and 3, 
        paragraphs (4), (5), and (6); 126C.43, subdivision 2; and 
        126C.48, subdivision 6.  
           (c) For fiscal year 2002 and later years, in June of each 
        year, the school district must recognize as revenue, in the fund 
        for which the levy was made, the lesser of: 
           (1) the sum of May, June, and July school district tax 
        settlement revenue received in that calendar year, plus general 
        education aid according to section 126C.13, subdivision 4, 
        received in July and August of that calendar year; or 
           (2) the sum of: 
           (i) 31 percent of the referendum levy certified according 
        to section 126C.17, in calendar year 2000; plus 
           (ii) the entire amount of the levy certified in the prior 
        calendar year according to section 124D.86, subdivision 4, for 
        school districts receiving revenue under sections 124D.86, 
        subdivision 3, clauses (1), (2), and (3); 126C.41, subdivisions 
        1, 2, and 3, paragraphs (4), (5), and (6); 126C.43, subdivision 
        2; and 126C.48, subdivision 6. 
           [EFFECTIVE DATE.] This section is effective June 30, 2001. 
           Sec. 7.  Minnesota Statutes 2000, section 123B.92, 
        subdivision 9, is amended to read: 
           Subd. 9.  [NONPUBLIC PUPIL TRANSPORTATION AID.] (a) A 
        district's nonpublic pupil transportation aid for the 1996-1997 
        and later school years for transportation services for nonpublic 
        school pupils according to sections 123B.88, 123B.84 to 123B.86, 
        and this section, equals the sum of the amounts computed in 
        paragraphs (b) and (c).  This aid does not limit the obligation 
        to transport pupils under sections 123B.84 to 123B.87. 
           (b) For regular and excess transportation according to 
        subdivision 1, paragraph (b), clauses (1) and (2), an amount 
        equal to the product of: 
           (1) the district's actual expenditure per pupil transported 
        in the regular and excess transportation categories during the 
        second preceding school year; times 
           (2) the number of nonpublic school pupils residing in the 
        district who receive regular or excess transportation service or 
        reimbursement for the current school year; times 
           (3) the ratio of the formula allowance pursuant to section 
        126C.10, subdivision 2, for the current school year to the 
        formula allowance pursuant to section 126C.10, subdivision 2, 
        for the second preceding school year. 
           (c) For nonpublic nonregular transportation according to 
        subdivision 1, paragraph (b), clause (5), an amount equal to the 
        product of: 
           (1) the district's actual expenditure for nonpublic 
        nonregular transportation during the second preceding school 
        year; times 
           (2) the ratio of the formula allowance pursuant to section 
        126C.10, subdivision 2, for the current school year to the 
        formula allowance pursuant to section 126C.10, subdivision 2, 
        for the second preceding school year. 
           (d) Notwithstanding the amount of the formula allowance for 
        fiscal years 2000, 2001, and 2002 in section 126C.10, 
        subdivision 2, the commissioner shall use the amount of the 
        formula allowance for the current year plus $87 in determining 
        the nonpublic pupil transportation revenue in paragraphs (b) and 
        (c) for fiscal year 2000, and the amount of the formula 
        allowance less $110 in determining the nonpublic pupil 
        transportation revenue in paragraphs (b) and (c) for fiscal 
        years 2001 and 2002. 
           (e) Notwithstanding the amount of the formula allowance for 
        fiscal years 2003 and 2004 in section 126C.10, subdivision 2, 
        the commissioner shall use the amount of the formula allowance 
        for the current year minus $415 in determining the nonpublic 
        pupil transportation revenue in paragraphs (b) and (c) for those 
        fiscal years. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 8.  Minnesota Statutes 2000, section 126C.01, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REFERENDUM MARKET VALUE.] "Referendum market 
        value" means the market value of all taxable property, except 
        that excluding property classified as class 2, noncommercial 
        4c(1), or 4c(4) under section 273.13.  The portion of class 2a 
        property consisting of the house, garage, and surrounding one 
        acre of land of an agricultural homestead is included in 
        referendum market value.  Any class of property, or any portion 
        of a class of property, with that is included in the definition 
        of referendum market value and that has a class rate of less 
        than one percent under section 273.13 shall have a referendum 
        market value equal to its net tax capacity multiplied by 100. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 9.  Minnesota Statutes 2000, section 126C.10, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL EDUCATION REVENUE.] (a) For fiscal 
        year 2000 and thereafter 2002, the general education revenue for 
        each district equals the sum of the district's basic revenue, 
        basic skills revenue, training and experience revenue, secondary 
        sparsity revenue, elementary sparsity revenue, transportation 
        sparsity revenue, total operating capital revenue, equity 
        revenue, referendum offset adjustment, transition revenue, and 
        supplemental revenue. 
           (b) For fiscal year 2003 and later, the general education 
        revenue for each district equals the sum of the district's basic 
        revenue, basic skills revenue, training and experience revenue, 
        secondary sparsity revenue, elementary sparsity revenue, 
        transportation sparsity revenue, total operating capital 
        revenue, and equity revenue. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2002 and thereafter. 
           Sec. 10.  Minnesota Statutes 2000, section 126C.10, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BASIC REVENUE.] The basic revenue for each 
        district equals the formula allowance times the adjusted 
        marginal cost pupil units for the school year.  The formula 
        allowance for fiscal year 1998 is $3,581.  The formula allowance 
        for fiscal year 1999 is $3,530.  The formula allowance for 
        fiscal year 2000 is $3,740.  The formula allowance for fiscal 
        year years 2001 and subsequent fiscal years 2002 is $3,964.  
        The formula allowance for fiscal year 2003 and subsequent fiscal 
        years is $4,379. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 11.  Minnesota Statutes 2000, section 126C.13, 
        subdivision 4, is amended to read: 
           Subd. 4.  [GENERAL EDUCATION AID.] A district's general 
        education aid is the sum of the following amounts:  
           (1) the product of (i) the difference between the general 
        education revenue, excluding transition revenue and supplemental 
        revenue, and the general education levy, times (ii) the ratio of 
        the actual amount levied to the permitted levy; 
           (2) transition aid according to section 126C.10, 
        subdivision 22; 
           (3) supplemental aid according to section 127A.49; 
           (4) shared time aid according to section 126C.01, 
        subdivision 7; and 
           (5) (3) referendum aid according to section 126C.17. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 12.  Minnesota Statutes 2000, section 126C.17, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REFERENDUM ALLOWANCE.] (a) For fiscal year 
        2002, a district's referendum revenue allowance equals 
        the referendum revenue authority for that year divided by its 
        resident marginal cost pupil units for that school year. sum of 
        the allowance under section 126C.16, subdivision 2, plus any 
        additional allowance per resident marginal cost pupil unit 
        authorized under subdivision 9 for fiscal year 2002. 
           (b) For fiscal year 2003 and later, a district's initial 
        referendum revenue allowance equals the sum of the allowance 
        under section 126C.16, subdivision 2, plus any additional 
        allowance per resident marginal cost pupil unit authorized under 
        subdivision 9 before May 1, 2001, for fiscal year 2002 and 
        later, plus the referendum conversion allowance approved under 
        subdivision 13, minus $415.  For districts with more than one 
        referendum authority, the reduction must be computed separately 
        for each authority.  The reduction must be applied first to the 
        referendum conversion allowance and next to the authority with 
        the earliest expiration date.  A district's initial referendum 
        revenue allowance may not be less than zero. 
           (c) For fiscal year 2003 and later, a district's referendum 
        revenue allowance equals the initial referendum allowance plus 
        any additional allowance per resident marginal cost pupil unit 
        authorized under subdivision 9 after April 30, 2001, for fiscal 
        year 2003 and later. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2002 and thereafter. 
           Sec. 13.  Minnesota Statutes 2000, section 126C.17, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REFERENDUM ALLOWANCE LIMIT.] (a) Notwithstanding 
        subdivision 1, for fiscal year 2002, a district's referendum 
        allowance must not exceed the greater of:  
           (1) the district's referendum allowance for fiscal year 
        1994; 
           (2) 25 percent of the formula allowance; or 
           (3) for a newly reorganized district created after July 1, 
        1994, the sum of the referendum revenue authority for the 
        reorganizing districts for the fiscal year preceding the 
        reorganization, divided by the sum of the resident marginal cost 
        pupil units of the reorganizing districts for the fiscal year 
        preceding the reorganization. 
           (b) Notwithstanding subdivision 1, for fiscal year 2003 and 
        later fiscal years, a district's referendum allowance must not 
        exceed the greater of: 
           (1) the sum of a district's referendum allowance for fiscal 
        year 1994 times 1.162 plus its referendum conversion allowance 
        for fiscal year 2003, minus $415; 
           (2) 18.2 percent of the formula allowance; 
           (3) for a newly reorganized district created on July 1, 
        2002, the referendum revenue authority for each reorganizing 
        district in the year preceding reorganization divided by its 
        resident marginal cost pupil units for the year preceding 
        reorganization, minus $415; or 
           (4) for a newly reorganized district created after July 1, 
        2002, the referendum revenue authority for each reorganizing 
        district in the year preceding reorganization divided by its 
        resident marginal cost pupil units for the year preceding 
        reorganization. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 14.  Minnesota Statutes 2000, section 126C.17, 
        subdivision 5, is amended to read: 
           Subd. 5.  [REFERENDUM EQUALIZATION REVENUE.] (a) For fiscal 
        year 2003 and later, a district's referendum equalization 
        revenue equals the sum of the first tier referendum equalization 
        revenue and the second tier referendum equalization revenue. 
           (b) A district's first tier referendum equalization revenue 
        equals the district's first tier referendum equalization 
        allowance times the district's resident marginal cost pupil 
        units for that year.  
           (b) The (c) A district's first tier referendum equalization 
        allowance equals $350 for fiscal year 2000 and $415 for fiscal 
        year 2001 and later. 
           (c) Referendum equalization revenue must not exceed a 
        district's total referendum revenue for that year the lesser of 
        the district's referendum allowance under subdivision 1 or $126. 
           (d) A district's second tier referendum equalization 
        revenue equals the district's second tier referendum 
        equalization allowance times the district's resident marginal 
        cost pupil units for that year. 
           (e) A district's second tier referendum equalization 
        allowance equals the lesser of the district's referendum 
        allowance under subdivision 1 or 18.2 percent of the formula 
        allowance, minus the district's first tier referendum 
        equalization allowance. 
           (f) Notwithstanding paragraph (e), the second tier 
        referendum allowance for a district qualifying for secondary 
        sparsity revenue under section 126C.10, subdivision 7, or 
        elementary sparsity revenue under section 126C.10, subdivision 
        8, equals the district's referendum allowance under subdivision 
        1 minus the district's first tier referendum equalization 
        allowance. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and revenue in fiscal year 2003, and thereafter. 
           Sec. 15.  Minnesota Statutes 2000, section 126C.17, 
        subdivision 6, is amended to read: 
           Subd. 6.  [REFERENDUM EQUALIZATION LEVY.] (a) For fiscal 
        year 2003 and later, a district's referendum equalization levy 
        for a referendum levied against the referendum market value of 
        all taxable property as defined in section 126C.01, subdivision 
        3, equals the sum of the first tier referendum equalization levy 
        and the second tier referendum equalization levy. 
           (b) A district's first tier referendum equalization levy 
        equals the district's first tier referendum equalization revenue 
        times the lesser of one or the ratio of the district's 
        referendum market value per resident marginal cost pupil unit to 
        $476,000. 
           (b) A district's referendum equalization levy for a 
        referendum levied against the net tax capacity of all taxable 
        property equals the district's referendum equalization revenue 
        times the lesser of one or the ratio of the district's adjusted 
        net tax capacity per resident marginal cost pupil unit to $8,404.
           (c) A district's second tier referendum equalization levy 
        equals the district's second tier referendum equalization 
        revenue times the lesser of one or the ratio of the district's 
        referendum market value per resident marginal cost pupil unit to 
        $270,000. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and revenue in fiscal year 2003, and thereafter. 
           Sec. 16.  Minnesota Statutes 2000, section 126C.17, 
        subdivision 7, is amended to read: 
           Subd. 7.  [REFERENDUM EQUALIZATION AID.] (a) A district's 
        referendum equalization aid equals the difference between its 
        referendum equalization revenue and levy. 
           (b) If a district's actual levy for first or second tier 
        referendum equalization revenue is less than its maximum levy 
        limit for that tier, aid shall be proportionately reduced. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and revenue in fiscal year 2003, and thereafter. 
           Sec. 17.  Minnesota Statutes 2000, section 126C.17, is 
        amended by adding a subdivision to read: 
           Subd. 7a.  [REFERENDUM TAX BASE REPLACEMENT AID.] For each 
        school district that had a referendum allowance for fiscal year 
        2002 exceeding $415, for each separately authorized referendum 
        levy, the commissioner of revenue, in consultation with the 
        commissioner of children, families, and learning, shall certify 
        the amount of the referendum levy in taxes payable year 2001 
        attributable to the portion of the referendum allowance 
        exceeding $415 levied against property classified as class 2 
        4c(1), or 4c(4), under section 273.13, excluding the portion of 
        the tax paid by the portion of class 2a property consisting of 
        the house, garage, and surrounding one acre of land.  The 
        resulting amount must be used to reduce the district's 
        referendum levy amount otherwise determined, and must be paid to 
        the district each year that the referendum authority remains in 
        effect.  The aid payable under this subdivision must be 
        subtracted from the district's referendum equalization aid under 
        subdivision 7.  The referendum equalization aid after the 
        subtraction must not be less than zero. 
           For the purposes of this subdivision, the referendum levy 
        with the latest year of expiration is assumed to be at the 
        highest level of equalization, and the referendum levy with the 
        earliest year of expiration is assumed to be at the lowest level 
        of equalization. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 18.  Minnesota Statutes 2000, section 126C.17, 
        subdivision 8, is amended to read: 
           Subd. 8.  [UNEQUALIZED REFERENDUM LEVY.] Each year, a 
        district may levy an amount equal to the difference between its 
        total referendum revenue according to subdivision 5 4 and its 
        equalized referendum aid and levy according to subdivisions 6 
        and 7 referendum equalization revenue according to subdivision 5.
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and revenue in fiscal year 2003, and thereafter. 
           Sec. 19.  Minnesota Statutes 2000, section 126C.17, is 
        amended by adding a subdivision to read: 
           Subd. 13.  [REFERENDUM CONVERSION ALLOWANCE.] A school 
        district that received supplemental or transition revenue in 
        fiscal year 2002 may convert its supplemental revenue conversion 
        allowance and transition revenue conversion allowance to 
        additional referendum allowance under subdivision 1 for fiscal 
        year 2003 and thereafter.  A majority of the school board must 
        approve the conversion at a public meeting before November 1, 
        2001.  For a district with other referendum authority, the 
        referendum conversion allowance approved by the board continues 
        until the portion of the district's other referendum authority 
        with the earliest expiration date after June 30, 2006, expires.  
        For a district with no other referendum authority, the 
        referendum conversion allowance approved by the board continues 
        until June 30, 2012. 
           Sec. 20.  Minnesota Statutes 2000, section 126C.63, 
        subdivision 8, is amended to read: 
           Subd. 8.  [MAXIMUM EFFORT DEBT SERVICE LEVY.] "Maximum 
        effort debt service levy" means the lesser of: 
           (1) a levy in whichever of the following amounts is 
        applicable: 
           (a) in any district receiving a debt service loan for a 
        debt service levy payable in 2002 and thereafter, or granted a 
        capital loan after January 1, 2001, a levy in total dollar 
        amount computed at a rate of 36 percent of adjusted net tax 
        capacity for taxes payable in 2002 and thereafter; 
           (b) in any district receiving a debt service loan for a 
        debt service levy payable in 1991 and thereafter, or granted a 
        capital loan after January 1, 1990, a levy in a total dollar 
        amount computed at a rate of 24 percent of adjusted net tax 
        capacity for taxes payable in 1991 and thereafter; 
           (b) (c) in any district granted a debt service loan after 
        July 31, 1981, or granted a capital loan which is approved after 
        July 31, 1981, a levy in a total dollar amount computed as a tax 
        rate of 21.92 percent on the adjusted net tax capacity for taxes 
        payable in 1991 and thereafter; or 
           (2) a levy in any district for which a capital loan was 
        approved prior to August 1, 1981, a levy in a total dollar 
        amount equal to the sum of the amount of the required debt 
        service levy and an amount which when levied annually will in 
        the opinion of the commissioner be sufficient to retire the 
        remaining interest and principal on any outstanding loans from 
        the state within 30 years of the original date when the capital 
        loan was granted.  
           The board in any district affected by the provisions of 
        clause (2) may elect instead to determine the amount of its levy 
        according to the provisions of clause (1).  If a district's 
        capital loan is not paid within 30 years because it elects to 
        determine the amount of its levy according to the provisions of 
        clause (2), the liability of the district for the amount of the 
        difference between the amount it levied under clause (2) and the 
        amount it would have levied under clause (1), and for interest 
        on the amount of that difference, must not be satisfied and 
        discharged pursuant to Minnesota Statutes 1988, or an earlier 
        edition of Minnesota Statutes if applicable, section 124.43, 
        subdivision 4. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 21.  Minnesota Statutes 2000, section 126C.69, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CAPITAL LOANS ELIGIBILITY.] Beginning July 1, 
        1999, a district is not eligible for a capital loan unless the 
        district's estimated net debt tax rate as computed by the 
        commissioner after debt service equalization aid would be more 
        than 24 36 percent of adjusted net tax capacity.  The estimate 
        must assume a 20-year maturity schedule for new debt. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 22.  Minnesota Statutes 2000, section 126C.69, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DISTRICT REQUEST FOR REVIEW AND COMMENT.] A 
        district or a joint powers district that intends to apply for a 
        capital loan must submit a proposal to the commissioner for 
        review and comment according to section 123B.71 by July 1 of an 
        odd-numbered year.  The commissioner shall prepare a review and 
        comment on the proposed facility, regardless of the amount of 
        the capital expenditure required to construct the facility.  In 
        addition to the information provided under section 123B.71, 
        subdivision 9, the commissioner shall require that predesign 
        packages comparable to those required under section 16B.335 be 
        prepared by the applicant school district.  The predesign 
        packages must be sufficient to define the scope, cost, and 
        schedule of the project and must demonstrate that the project 
        has been analyzed according to appropriate space needs standards 
        and also consider the following criteria in determining whether 
        to make a positive review and comment.  
           (a) To grant a positive review and comment the commissioner 
        shall determine that all of the following conditions are met: 
           (1) the facilities are needed for pupils for whom no 
        adequate facilities exist or will exist; 
           (2) the district will serve, on average, at least 80 pupils 
        per grade or is eligible for elementary or secondary sparsity 
        revenue there is evidence to indicate that the facilities will 
        have a useful public purpose for at least the term of the bonds; 
           (3) no form of cooperation with another district would 
        provide the necessary facilities; 
           (4) the facilities are comparable in size and quality to 
        facilities recently constructed in other districts that have 
        similar enrollments; 
           (5) the facilities are comparable in size and quality to 
        facilities recently constructed in other districts that are 
        financed without a capital loan; 
           (6) the district is projected to maintain or increase its 
        average daily membership over the next five years or is eligible 
        for elementary or secondary sparsity revenue have adequate funds 
        in its general operating budget to support a quality education 
        for its students for at least the next five years; 
           (7) the current facility poses a threat to the life, 
        health, and safety of pupils, and cannot reasonably be brought 
        into compliance with fire, health, or life safety codes; 
           (8) the district has made a good faith effort, as evidenced 
        by its maintenance expenditures, to adequately maintain the 
        existing facility during the previous ten years and to comply 
        with fire, health, and life safety codes and state and federal 
        requirements for handicapped accessibility; 
           (9) the district has made a good faith effort to encourage 
        integration of social service programs within the new facility; 
        and 
           (10) evaluations by boards of adjacent districts have been 
        received; and 
           (11) the proposal includes a comprehensive technology plan 
        that assures information access for the students, parents, and 
        community. 
           (b) The commissioner may grant a negative review and 
        comment if: 
           (1) the state demographer has examined the population of 
        the communities to be served by the facility and determined that 
        the communities have not grown during the previous five years; 
           (2) the state demographer determines that the economic and 
        population bases of the communities to be served by the facility 
        are not likely to grow or to remain at a level sufficient, 
        during the next ten years, to ensure use of the entire facility; 
           (3) the need for facilities could be met within the 
        district or adjacent districts at a comparable cost by leasing, 
        repairing, remodeling, or sharing existing facilities or by 
        using temporary facilities; 
           (4) the district plans do not include cooperation and 
        collaboration with health and human services agencies and other 
        political subdivisions; or 
           (5) if the application is for new construction, an existing 
        facility that would meet the district's needs could be purchased 
        at a comparable cost from any other source within the area. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 23.  Minnesota Statutes 2000, section 126C.69, 
        subdivision 9, is amended to read: 
           Subd. 9.  [LOAN AMOUNT LIMITS.] (a) A loan must not be 
        recommended for approval for a district exceeding an amount 
        computed as follows: 
           (1) the amount requested by the district under subdivision 
        6; 
           (2) plus the aggregate principal amount of general 
        obligation bonds of the district outstanding on June 30 of the 
        year following the year the application was received, not 
        exceeding the limitation on net debt of the district in section 
        475.53, subdivision 4, or 363 540 percent of its adjusted net 
        tax capacity as most recently determined, whichever is less; 
           (3) less the maximum net debt permissible for the district 
        on December 1 of the year the application is received, under the 
        limitation in section 475.53, subdivision 4, or 363 540 percent 
        of its adjusted net tax capacity as most recently determined, 
        whichever is less; 
           (4) less any amount by which the amount voted exceeds the 
        total cost of the facilities for which the loan is granted.  
           (b) The loan may be approved in an amount computed as 
        provided in paragraph (a), clauses (1) to (3), subject to later 
        reduction according to paragraph (a), clause (4). 
           [EFFECTIVE DATE.] This section is effective for loan 
        applications submitted after July 1, 2001. 
           Sec. 24.  Minnesota Statutes 2000, section 126C.69, 
        subdivision 12, is amended to read: 
           Subd. 12.  [CONTRACT.] (a) Each capital loan must be 
        evidenced by a contract between the district and the state 
        acting through the commissioner.  The contract must obligate the 
        state to reimburse the district, from the maximum effort school 
        loan fund, for eligible capital expenses for construction of the 
        facility for which the loan is granted, an amount computed as 
        provided in subdivision 9.  The commissioner must receive from 
        the district a certified resolution of the board estimating the 
        costs of construction and reciting that contracts for 
        construction of the facilities for which the loan is granted 
        have been awarded and, that bonds of the district have been 
        issued and sold in the amount necessary to pay all estimated 
        costs of construction in excess of the amount of the loan, and 
        that all work, when completed, meets or exceeds standards 
        established in the state building code.  The contract must 
        obligate the district to repay the loan out of the excesses of 
        its maximum effort debt service levy over its required debt 
        service levy, including interest at a rate equal to the weighted 
        average annual rate payable on Minnesota state school loan bonds 
        issued or reissued for the project and disbursed to the 
        districts on a reimbursement basis, but in no event less than 
        3-1/2 percent per year on the principal amount from time to time 
        unpaid. 
           (b) The district must each year, as long as it is indebted 
        to the state, levy for debt service (i) the amount of its 
        maximum effort debt service levy or (ii) the amount of its 
        required debt service levy, whichever is greater, except as the 
        required debt service levy may be reduced by a loan under 
        section 126C.68.  The district shall remit payments to the 
        commissioner according to section 126C.71. 
           (c) The commissioner shall supervise the collection of 
        outstanding accounts due the fund and may, by notice to the 
        proper county auditor, require the maximum levy to be made as 
        required in this subdivision.  Interest on capital loans must be 
        paid on December 15 of the year after the year the loan is 
        granted and annually in later years.  By September 30, the 
        commissioner shall notify the county auditor of each county 
        containing taxable property situated within the district of the 
        amount of the maximum effort debt service levy of the district 
        for that year.  The county auditor or auditors shall extend upon 
        the tax rolls an ad valorem tax upon all taxable property within 
        the district in the aggregate amount so certified. 
           [EFFECTIVE DATE.] This section is effective for loan 
        applications submitted after July 1, 2001. 
           Sec. 25.  Minnesota Statutes 2000, section 126C.69, 
        subdivision 15, is amended to read: 
           Subd. 15.  [BOND SALE LIMITATIONS.] (a) A district having 
        an outstanding state loan must not issue and sell any bonds on 
        the public market, except to refund state loans, unless it 
        agrees to make the maximum effort debt service levy in each 
        later year at the higher rate provided in section 126C.63, 
        subdivision 8, and unless it schedules the maturities of the 
        bonds according to section 475.54, subdivision 2.  A district 
        that refunds bonds at a lower interest rate may continue to make 
        the maximum effort debt service levy in each later year at the 
        current rate provided in section 126C.63, subdivision 8, if the 
        district can demonstrate to the commissioner's satisfaction that 
        the district's repayments of the state loan will not be reduced 
        below the previous year's level.  The district must report each 
        sale to the commissioner. 
           (b) For a capital loan issued prior to July 1, 2001, after 
        a the district's capital loan has been outstanding for 30 years, 
        the district must not issue bonds on the public market except to 
        refund the loan. 
           (c) For a capital loan issued on or after July 1, 2001, 
        after the district's capital loan has been outstanding for 20 
        years, the district must not issue bonds on the public market 
        except to refund the loan. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 26.  Minnesota Statutes 2000, section 475.53, 
        subdivision 4, is amended to read: 
           Subd. 4.  [SCHOOL DISTRICTS.] Except as otherwise provided 
        by law, no school district shall be subject to a net debt in 
        excess of ten 15 percent of the actual market value of all 
        taxable property situated within its corporate limits, as 
        computed in accordance with this subdivision.  The county 
        auditor of each county containing taxable real or personal 
        property situated within any school district shall certify to 
        the district upon request the market value of all such 
        property.  Whenever the commissioner of revenue, in accordance 
        with section 127A.48, subdivisions 1 to 6, has determined that 
        the net tax capacity of any district furnished by county 
        auditors is not based upon the market value of taxable property 
        in the district, the commissioner of revenue shall certify to 
        the district upon request the ratio most recently ascertained to 
        exist between such value and the actual market value of property 
        within the district.  The actual market value of property within 
        a district, on which its debt limit under this subdivision is 
        based, is (a) the value certified by the county auditors, or (b) 
        this value divided by the ratio certified by the commissioner of 
        revenue, whichever results in a higher value. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 27.  [SUPPLEMENTAL REVENUE CONVERSION ALLOWANCE.] 
           A district's supplemental revenue conversion allowance is 
        equal to the district's total fiscal year 2002 supplemental 
        revenue divided by its fiscal year 2002 resident marginal cost 
        pupil units. 
           [EFFECTIVE DATE.] This section is effective for revenue for 
        fiscal year 2003. 
           Sec. 28.  [TRANSITION REVENUE CONVERSION ALLOWANCE.] 
           A district's transition revenue conversion allowance is 
        equal to the district's total fiscal year 2002 transition 
        revenue divided by its fiscal year 2002 resident marginal cost 
        pupil units. 
           [EFFECTIVE DATE.] This section is effective for revenue for 
        fiscal year 2003. 
           Sec. 29.  [APPROPRIATIONS.] 
           Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
        LEARNING.] The sums indicated in this section are appropriated 
        from the general fund to the department of children, families, 
        and learning for the fiscal years designated.  
           Subd. 2.  [REFERENDUM TAX BASE REPLACEMENT AID.] For 
        referendum tax base replacement aid according to Minnesota 
        Statutes, section 126C.17, subdivision 7a: 
             $7,851,000     .....     2003
           The 2003 appropriation includes $0 for 2002 and $7,851,000 
        for 2003.  
           Subd. 3.  [DEBT SERVICE AID.] For debt service aid 
        according to Minnesota Statutes, section 123B.53, subdivision 6: 
             $25,989,000    .....     2002 
             $35,163,000    .....     2003 
           The 2002 appropriation includes $2,890,000 for 2001 and 
        $23,099,000 for 2002. 
           The 2003 appropriation includes $2,567,000 for 2002 and 
        $32,956,000 for 2003. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 30.  [REPEALER.] 
           (a) Minnesota Statutes 2000, sections 126C.10, subdivisions 
        9, 10, 11, 12, 19, 20, 21, and 22; and 126C.11, are repealed 
        effective for revenue for fiscal year 2003. 
           (b) Minnesota Statutes 2000, section 126C.13, subdivisions 
        1, 2, and 3, are repealed effective for taxes payable in 2002. 

                                   ARTICLE 3 
                                 PROPERTY TAXES 
           Section 1.  [16A.1523] [LOCAL GOVERNMENT AID REFORM 
        ACCOUNT.] 
           Subdivision 1.  [ACCOUNT ESTABLISHED.] A local government 
        aid reform account is established in the general fund.  Amounts 
        in this account are available for and may only be spent in 
        conjunction with reforming local government aids under chapter 
        477A.  The reforms may include, but are not limited to: 
           (1) changes to the local government aid distribution 
        formula; and 
           (2) supplemental aids to address local government aid 
        disparity problems. 
           The balance in the account does not cancel and remains in 
        the account until appropriated for local government aid reform. 
           Subd. 2.  [APPROPRIATION.] Beginning in fiscal year 2003, 
        and in each fiscal year thereafter, $14,000,000 is appropriated 
        from the general fund to the local government aid reform account 
        established in subdivision 1.  In fiscal year 2004, and each 
        year thereafter, until the balance of the account is 
        appropriated by the legislature to local government aid reform, 
        an amount equal to the balance at the end of the fiscal year 
        times 2.5 percent is also appropriated from the general fund to 
        the account. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 2.  [16A.88] [TRANSIT FUNDS.] 
           Subdivision 1.  [GREATER MINNESOTA TRANSIT FUND.] The 
        greater Minnesota transit fund is established within the state 
        treasury.  Money in the fund is annually appropriated to the 
        commissioner of transportation for assistance to transit systems 
        outside the metropolitan area under section 174.24.  
           Subd. 2.  [METROPOLITAN AREA TRANSIT FUND.] The 
        metropolitan area transit fund is established within the state 
        treasury.  All money in the fund is annually appropriated to the 
        metropolitan council for the funding of transit systems within 
        the metropolitan area under sections 473.384, 473.387, 473.388, 
        and 473.405 to 473.449. 
           Subd. 3.  [METROPOLITAN AREA TRANSIT APPROPRIATION 
        ACCOUNT.] The metropolitan area transit appropriation account is 
        established within the general fund.  Money in the account is to 
        be used for the funding of transit systems in the metropolitan 
        area, subject to legislative appropriation.  
           [EFFECTIVE DATE.] This section is effective July 1, 2002. 
           Sec. 3.  [103B.253] [COUNTY LEVY AUTHORITY.] 
           Notwithstanding any other law to the contrary, a county 
        levying a tax under section 103B.241, 103B.245, or 103B.251 
        shall not include any taxes levied under those authorities in 
        the levy certified under section 275.07, subdivision 1, 
        paragraph (a).  A county levying under section 103B.241, 
        103B.245, or 103B.251 shall separately certify that amount and 
        the auditor shall extend that levy as a special taxing district 
        levy under sections 275.066 and 275.07, subdivision 1, paragraph 
        (b). 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2001, payable in 2002, and thereafter. 
           Sec. 4.  Minnesota Statutes 2000, section 103D.905, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ADMINISTRATIVE GENERAL FUND.] An administrative 
        A general fund, consisting of an ad valorem tax levy, may not 
        exceed 0.02418 0.048 percent of taxable market value, or 
        $125,000 $250,000, whichever is less.  The money in the fund 
        shall be used for general administrative expenses and for the 
        construction or implementation and maintenance of projects of 
        common benefit to the watershed district.  The managers may make 
        an annual levy for the administrative general fund as provided 
        in section 103D.911.  In addition to the annual administrative 
        general levy, the managers may annually levy a tax not to exceed 
        0.00798 percent of taxable market value for a period not to 
        exceed 15 consecutive years to pay the cost attributable to the 
        basic water management features of projects initiated by 
        petition of a municipality of political subdivision within the 
        watershed district or by petition of at least 50 resident owners 
        whose property is within the watershed district.  
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2001, payable in 2002, and thereafter. 
           Sec. 5.  Minnesota Statutes 2000, section 123A.45, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PETITION.] The petition must contain: 
           (a) A correct description of the area proposed for 
        detachment and annexation, including supporting data regarding 
        location and title to land to establish that the land is 
        adjoining a district. 
           (b) The reasons for the proposed change with facts showing 
        that the granting of the petition will not reduce the size of 
        any district to less than four sections, unless the district is 
        not operating a school within the district. 
           (c) Consent to the petition, if, at the time of the filing 
        of the petition, any part of the area proposed for detachment is 
        part of a district which maintains and operates a secondary 
        school within the district.  Before the hearing, the consent of 
        the board of the district in which the area proposed for 
        detachment lies must be endorsed on the petition. 
           (d) An identification of the district to which annexation 
        is sought. 
           (e) Other information the petitioners may desire to affix. 
           (f) An acknowledgment by the petitioner. 
           (g) A description of whether bonded indebtedness will be 
        allocated according to subdivision 6, paragraph (b) or (c). 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment for detachment and annexation requests 
        approved by a county board on or after that date. 
           Sec. 6.  Minnesota Statutes 2000, section 123A.45, 
        subdivision 6, is amended to read: 
           Subd. 6.  [TAXABLE PROPERTY.] (a) Upon the effective date 
        of the order, the detachment and annexation is effected.  The 
        bonded indebtedness must be assigned to the detached and annexed 
        land under either paragraph (b) or (c). 
           (b) Unless specified separately under paragraph (c), all 
        taxable property in the area so detached and annexed remains 
        taxable for payment of any school purpose obligations already 
        authorized by or outstanding on the effective date of the order 
        against the district from which detached.  The order does not 
        relieve such property from the obligation of any bonded debt 
        already incurred to which it was subject prior to the order.  
        All taxable property in the area so detached and annexed is 
        taxable for payment of any district obligations authorized on or 
        subsequent to the effective date of the order by the district to 
        which annexation is made. 
           (c) Alternatively, if the school board of the district in 
        which the area is proposed for detachment and the school board 
        of the district in which the area is proposed for annexation 
        agree, all taxable property in the area detached and annexed 
        shall be taxable by the school district to which the property is 
        annexed.  Detached and annexed property is relieved from the 
        obligation of any bonded debt already incurred by the district 
        in which the area is detached and is obligated for any bonded 
        debt already incurred by the district to which the area is 
        annexed. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment for detachment and annexation requests 
        approved by a county board on or after that date. 
           Sec. 7.  [126C.455] [SWIMMING POOL LEVY.] 
           Each year, a school district with its home office located 
        in a county that has (i) a population density of ten or fewer 
        persons per square mile according to the 2000 census of 
        population; (ii) an international border; and (iii) more than 
        one school district within its boundaries, may levy for the net 
        operational costs of a swimming pool.  The levy may not exceed 
        the net actual costs of operation of the swimming pool for the 
        previous year.  Net actual costs are defined as operating costs 
        less any operating revenues and less any payments from other 
        local governmental units. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and later. 
           Sec. 8.  [144F.01] [EMERGENCY MEDICAL SERVICES SPECIAL 
        TAXING DISTRICTS.] 
           Subdivision 1.  [POLITICAL SUBDIVISION DEFINED.] In this 
        section, "political subdivision" means a county, a statutory or 
        home rule charter city, or a township organized to provide town 
        government. 
           Subd. 2.  [WHO MAY ESTABLISH.] Two or more political 
        subdivisions, or parts of them, may establish by resolution of 
        their governing bodies a special taxing district for emergency 
        medical services.  The participating territory of a 
        participating political subdivision need not abut any other 
        participating territory to be in the special taxing district. 
           Subd. 3.  [BOARD.] The special taxing district under this 
        section is governed by a board made up initially of 
        representatives of each participating political subdivision in 
        the proportions set out in the establishing resolution, subject 
        to change as provided in the district's charter, if any, or in 
        the district's bylaws.  Each participant's representative serves 
        at the pleasure of that participant's governing body. 
           Subd. 4.  [PROPERTY TAX LEVY AUTHORITY.] The district's 
        board may levy a tax on the taxable real and personal property 
        in the district.  The ad valorem tax levy may not exceed 0.048 
        percent of the taxable market value of the district or $250,000, 
        whichever is less.  The proceeds of the levy must be used as 
        provided in subdivision 5.  The board shall certify the levy at 
        the times as provided under section 275.07.  The board shall 
        provide the county with whatever information is necessary to 
        identify the property that is located within the district.  If 
        the boundaries include a part of a parcel, the entire parcel 
        shall be included in the district.  The county auditors must 
        spread, collect, and distribute the proceeds of the tax at the 
        same time and in the same manner as provided by law for all 
        other property taxes. 
           Subd. 5.  [USE OF LEVY PROCEEDS.] The proceeds of property 
        taxes levied under this section must be used to support the 
        providing of out-of-hospital emergency medical services 
        including, but not limited to, first responder or rescue squads 
        recognized by the district, ambulance services licensed under 
        chapter 144E and recognized by the district, medical control 
        functions set out in chapter 144E, communications equipment and 
        systems, and programs of regional emergency medical services 
        authorized by regional boards described in section 144E.52. 
           Subd. 6.  [ADVISORY COMMITTEE.] A special taxing district 
        board under this section must have an advisory committee to 
        advise the board on issues involving emergency medical services 
        and EMS communications.  The committee's membership must be 
        comprised of representatives of first responders, ambulance 
        services, ambulance medical directors, and EMS communication 
        experts.  The advisory committee members serve at the pleasure 
        of the appointing board. 
           Subd. 7.  [POWERS.] (a) In addition to authority expressly 
        granted in this section, a special taxing district under this 
        section may exercise any power that may be exercised by any of 
        its participating political subdivisions, except that the board 
        may not incur debt.  The special taxing district may only use 
        the power to do what is necessary or reasonable to support the 
        services set out in subdivision 5. 
           (b) Notwithstanding paragraph (a), the district may only 
        levy the taxes authorized in this section. 
           Subd. 8.  [ADDITIONS AND WITHDRAWALS.] (a) Additional 
        eligible political subdivisions may be added to a special taxing 
        district under this section as provided by the board of the 
        district and agreed to in a resolution of the governing body of 
        the political subdivision proposed to be added. 
           (b) A political subdivision may withdraw from a special 
        taxing district under this section by resolution of its 
        governing body.  The political subdivision must notify the board 
        of the special taxing district of the withdrawal by providing a 
        copy of the resolution at least one year in advance of the 
        proposed withdrawal.  The taxable property of the withdrawing 
        member is subject to the property tax levy under subdivision 4 
        for the taxes payable year following the notice of the 
        withdrawal, unless the board and the withdrawing member agree 
        otherwise by action of their governing bodies. 
           (c) Notwithstanding subdivision 2, if the district is 
        comprised of only two political subdivisions and one of the 
        political subdivisions withdraws, the district can continue to 
        exist. 
           Subd. 9.  [DISSOLUTION.] If the special taxing district is 
        dissolved, the assets and liabilities may be assigned to a 
        successor entity, if any, or otherwise disposed of for public 
        purposes as provided by law.  
           Subd. 10.  [REPORTS.] On or before March 15, 2005, and 
        March 15, 2007, the special taxing district shall submit a levy 
        and expenditure report to the commissioner of revenue and to the 
        chairs of the house and senate committees with jurisdiction over 
        taxes.  Each report must include the amount of the district's 
        levies for taxes payable for each of the two previous years and 
        its actual expenditures of those revenues.  Expenditures must be 
        reported by general service category, as listed in subdivision 
        5, and include a separate category for administrative expenses. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, through taxes levied in 2007, 
        payable in 2008. 
           Sec. 9.  Minnesota Statutes 2000, section 174.24, 
        subdivision 3b, is amended to read: 
           Subd. 3b.  [OPERATING ASSISTANCE.] (a) The commissioner 
        shall determine the total operating cost of any public transit 
        system receiving or applying for assistance in accordance with 
        generally accepted accounting principles.  To be eligible for 
        financial assistance, an applicant or recipient shall provide to 
        the commissioner all financial records and other information and 
        shall permit any inspection reasonably necessary to determine 
        total operating cost and correspondingly the amount of 
        assistance which may be paid to the applicant or recipient.  
        Where more than one county or municipality contributes 
        assistance to the operation of a public transit system, the 
        commissioner shall identify one as lead agency for the purpose 
        of receiving moneys money under this section.  
           (b) Prior to distributing operating assistance to eligible 
        recipients for any contract period, the commissioner shall place 
        all recipients into one of the following classifications:  large 
        urbanized area service, urbanized area service, small urban area 
        service, rural area service, and elderly and handicapped 
        service.  The commissioner shall distribute funds under this 
        section so that the percentage of total operating cost paid by 
        any recipient from local sources will not exceed the percentage 
        for that recipient's classification, except as provided in an 
        undue hardship case.  The percentages shall must be:  for large 
        urbanized area service, 50 percent; for urbanized area service 
        and small urban area service, 40 percent; for rural area 
        service, 35 percent; and for elderly and handicapped service, 35 
        percent.  The remainder of the total operating cost will be paid 
        from state funds less any assistance received by the recipient 
        from any federal source.  For purposes of this subdivision 
        "local sources" means payments under section 174.242 plus all 
        local sources of funds and includes all operating revenue, tax 
        levies, and contributions from public funds, except that the 
        commissioner may exclude from the total assistance contract 
        revenues derived from operations the cost of which is excluded 
        from the computation of total operating cost.  Total operating 
        costs for the Duluth transit authority or a successor agency 
        shall not include costs related to the Superior, Wisconsin 
        service contract and the independent school district No. 709 
        service contract.  
           (c) If a recipient informs the commissioner in writing 
        after the establishment of these percentages but prior to the 
        distribution of financial assistance for any year that paying 
        its designated percentage of total operating cost from local 
        sources will cause undue hardship, the commissioner may reduce 
        the percentage to be paid from local sources by the recipient 
        and increase the percentage to be paid from local sources by one 
        or more other recipients inside or outside the classification, 
        provided that no recipient shall have its percentage thus 
        reduced or increased for more than two years successively.  If 
        for any year the funds appropriated to the commissioner to carry 
        out the purposes of this section are insufficient to allow the 
        commissioner to pay the state share of total operating cost as 
        provided in this paragraph, the commissioner shall reduce the 
        state share in each classification to the extent necessary. 
           [EFFECTIVE DATE.] This section is effective for contracts 
        for service for calendar year 2002 and subsequent years.  
           Sec. 10.  [174.242] [PROPERTY TAX REPLACEMENT AID.] 
           Subdivision 1.  [REPORT OF PROPERTY TAX REVENUES.] By July 
        31, 2001, each system receiving assistance under section 174.24 
        must report the amount of its local share operating revenues for 
        2001 that are derived from property taxes to the commissioner of 
        transportation.  The reported amounts must include property tax 
        revenues used to fund transit services in excess of the services 
        provided under contract with the department of transportation.  
        The reports shall separately identify the property tax revenues 
        by the taxing jurisdiction from which the revenues were 
        received.  All general fund revenues provided by a local 
        government unit in Minnesota shall be considered property tax 
        revenues, except for revenues received from school districts.  
        The portion of the St. Cloud metropolitan area transit 
        commission's homestead and agricultural credit aid attributable 
        to transit operating expenses shall be considered property tax 
        revenues. 
           Subd. 2.  [VERIFICATION BY COMMISSIONER.] The commissioner 
        shall examine the reports submitted under subdivision 1, and 
        adjust the revenue amounts reported if they are determined to be 
        in error.  The commissioner may require a system to provide 
        whatever information is necessary to assist in determining the 
        accuracy of the reported amounts. 
           Subd. 3.  [REPLACEMENT AID PAYMENTS.] Each system shall 
        receive property tax replacement aid payments in calendar years 
        2002-2003 equal to (i) the proportion that the system's property 
        tax amount determined under subdivision 2 is of the total amount 
        determined under subdivision 2 for all systems, times (ii) the 
        projected total revenues for the greater Minnesota transit fund 
        for the full fiscal year that begins in the calendar year in 
        which the aid is payable.  A system's property tax replacement 
        aid for 2002 under this section may not exceed 106 percent of 
        its 2001 property tax amount determined under subdivision 2.  A 
        system's property tax replacement aid for 2003 under this 
        section may not exceed 106 percent of its 2002 property tax 
        replacement aid under this section.  The commissioner must 
        certify the replacement aid amounts for calendar years 2002-2003 
        to the commissioner of revenue by system and by taxing 
        jurisdiction by August 15 of the preceding year.  The 
        commissioner of revenue shall deduct the certified amounts from 
        each jurisdiction's levy limit.  Replacement aid amounts for the 
        St. Cloud metropolitan area transit commission and the Duluth 
        transit authority shall be deducted from the levy limit for each 
        of these jurisdictions as specified in chapter 458A.  The annual 
        payments to each system shall be made in two equal installments 
        on July 20 and November 20. 
           Subd. 4.  [REPORT TO THE LEGISLATURE.] By January 1, 2003, 
        the commissioner of transportation, in consultation with the 
        commissioner of revenue, shall make a report to the legislature 
        containing recommendations for integrating the grant program 
        under section 174.24 with the property tax replacement aid 
        program under this section.  The recommendations shall attempt 
        to restructure the method of financing transit operations in 
        greater Minnesota in such a way as to minimize reliance on 
        property taxes, while allowing the necessary flexibility to 
        accommodate growth in service demands. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 11.  [216B.1646] [RATE REDUCTION; PROPERTY TAX 
        REDUCTION.] 
           (a) The commission shall, by any method the commission 
        finds appropriate, reduce the amounts each electric utility 
        subject to rate regulation by the commission charges its 
        customers to reflect the amount by which each utility's property 
        tax on the personal property of its electric generation, 
        transmission, or distribution system from taxes payable in 2001 
        to taxes payable in 2002 is reduced.  The commission must ensure 
        that, to the extent feasible, each dollar of property tax 
        reduction allocated to Minnesota consumers retroactive to 
        January 1, 2002, results in a dollar of savings to the utility's 
        customers. 
           (b) By April 10, 2002, each utility shall submit a filing 
        to the commission containing: 
           (1) certified information regarding the utility's property 
        tax savings allocated to Minnesota retail customers; and 
           (2) a proposed method of passing these savings on to 
        Minnesota retail customers. 
           The utility shall provide the information in clause (1) to 
        the commissioner of revenue at the same time.  The commissioner 
        shall notify the commission within 30 days as to the accuracy of 
        the property tax data submitted by the utility. 
           (c)  For purposes of this section, "personal property" 
        means tools, implements, and machinery of the generating plant.  
        It does not apply to transformers, transmission lines, 
        distribution lines, or any other tools, implements, and 
        machinery that are part of an electric substation, wherever 
        located. 
           Sec. 12.  [216B.1692] [EMISSIONS REDUCTION RIDER.] 
           Subdivision 1.  [QUALIFYING PROJECTS.] Projects that may be 
        approved for the emissions reduction rate rider allowed in this 
        section must: 
           (1) be installed on existing large electric generating 
        power plants, as defined in section 216B.2421, subdivision 2, 
        clause (1), that are located in the state and that are currently 
        not subject to emission limitations for new power plants under 
        the federal Clean Air Act; 
           (2) not increase the capacity of the existing electric 
        generating power plant more than ten percent or more than 100 
        megawatts, whichever is greater; and 
           (3) result in the existing plant either: 
           (i) complying with applicable new source review standards 
        under the federal Clean Air Act; or 
           (ii) emitting air contaminants at levels substantially 
        lower than allowed for new facilities by the applicable new 
        source performance standards under the federal Clean Air Act; or 
           (iii) reducing emissions from current levels at a unit to 
        the lowest cost effective level when, due to the age or 
        condition of the generating unit, the public utility 
        demonstrates that it would not be cost effective to reduce 
        emissions to the levels in (i) or (ii). 
           Subd. 2.  [SUBMISSION.] A public utility that intends to 
        submit a proposal for an emissions reduction rider under this 
        section must submit to the commission, the department, the 
        pollution control agency, and interested parties its plans for 
        emissions reduction projects at its generating facilities.  This 
        submission must be made at least 60 days in advance of a 
        petition for a rider and shall include: 
           (1) the priority order of emission reduction projects the 
        utility plans to pursue at its generating facilities; 
           (2) the planned schedule for implementation; 
           (3) the analysis and considerations relied on by the public 
        utility to develop that priority ranking; 
           (4) the alternative emission reduction projects considered, 
        including but not limited to applications of the best available 
        control technology and repowering with natural gas, and reasons 
        for not pursuing them; 
           (5) the emission reductions expected to be achieved by the 
        projects and their relation to applicable standards for new 
        facilities under the federal Clean Air Act; and 
           (6) the general rationale and conclusions of the public 
        utility in determining the priority ranking. 
           Subd. 3.  [FILING.] A public utility may petition the 
        commission for approval of an emissions reduction rider to 
        recover the costs of a qualifying emission reduction project 
        outside of a general rate case proceeding under section 
        216B.16.  In its filing, the public utility shall provide: 
           (1) a description of the planned emissions reduction 
        project; 
           (2) the activities involved in the project; 
           (3) a schedule for implementation; 
           (4) any analysis provided to the pollution control agency 
        regarding the project; 
           (5) an assessment of alternatives to the project, including 
        costs, environmental impact, and operational issues; 
           (6) the proposed method of cost recovery; 
           (7) any proposed recovery above cost; and 
           (8) the projected emissions reductions from the project.  
           Nothing in this section precludes a public utility or 
        interested party from seeking commission guidelines for 
        emissions reduction rider filings; however, commission 
        guidelines are not required as a prerequisite to a public 
        utility-initiated filing. 
           Subd. 4.  [ENVIRONMENTAL ASSESSMENT.] The pollution control 
        agency shall evaluate the public utility's emission reduction 
        project filing and provide the commission with:  
           (1) verification that the emission reduction project 
        qualifies under subdivision 1; 
           (2) a description of the projected environmental benefits 
        of the proposed project; and 
           (3) its assessment of the appropriateness of the proposed 
        project. 
           Subd. 5.  [APPROVAL.] After receiving the pollution control 
        agency's environmental assessment, the commission shall allow 
        opportunity for written and oral comment on the proposed 
        emissions reduction rate rider proposal.  The commission must 
        assess the costs of an emission reduction project on a stand 
        alone basis and may approve, modify, or reject the proposed 
        emissions reduction rider.  In making its determination, the 
        commission shall consider whether the project, proposed cost 
        recovery, and any proposed recovery above cost appropriately 
        achieves environmental benefits without unreasonable consumer 
        costs.  The commission may approve a rider that: 
           (1) allows the utility to recover costs of qualifying 
        emission reduction projects net of revenues attributable to the 
        project; 
           (2) allows an appropriate return on investment associated 
        with qualifying emission reduction projects at the level 
        established in the public utility's last general rate case; 
           (3) allocates project costs appropriately between wholesale 
        and retail customers; 
           (4) provides a mechanism for recovery above cost, if 
        necessary to improve the overall economics of the qualifying 
        projects to ensure implementation; 
           (5) recovers costs from retail customer classes in 
        proportion to class energy consumption; and 
           (6) terminates recovery once the costs of qualifying 
        projects have been fully recovered. 
           The commission must not approve an emission reduction 
        project and its associated rate rider if: 
           (1) the emissions reduction project is needed to comply 
        with new state or federal air quality standards; or 
           (2) the emissions reduction project is required as a 
        corrective action as part of any state or federal enforcement 
        action. 
           The commission may not include any costs of a proposed 
        project in the emission reduction rider that are not directly 
        allocable to reduction of emissions. 
           Subd. 6.  [IMPLEMENTATION.] Within 60 days of a final 
        commission order, the public utility shall notify the commission 
        and the pollution control agency whether it will proceed with 
        the project.  Nothing in this section commits a public utility 
        to implementing a proposed emission reduction project if the 
        proposed project or terms of the emissions reduction rider have 
        been either modified or rejected by the commission.  A public 
        utility implementing a project under this section will not be 
        required for a period of eight years after installation to 
        undertake additional investments to comply with a new state 
        requirement regarding pollutants addressed by the project at the 
        project generating facility.  This section does not affect 
        requirements of federal law.  The term of the rider shall extend 
        for the period approved by the commission regardless of any 
        subsequent state or federal requirement affecting any pollutant 
        addressed by the approved emission reduction project and 
        regardless of the sunset date in subdivision 8. 
           Subd. 7.  [EVALUATION.] By January 15, 2005, the 
        commission, in consultation with the commissioner of commerce 
        and commissioner of the pollution control agency, shall report 
        to the legislature: 
           (1) the number of participating public utilities and 
        qualifying projects proposed and approved under this section; 
           (2) the total cost of each project and any associated 
        incentives; 
           (3) the reduction in air emissions achieved; 
           (4) rate impacts of the cost recovery mechanisms; and 
           (5) an assessment of the effectiveness of the cost recovery 
        mechanism in accomplishing power plant emissions reductions in 
        excess of those required by law. 
           Subd. 8.  [SUNSET.] This section is effective until June 
        30, 2006. 
           Sec. 13.  Minnesota Statutes 2000, section 216B.2424, 
        subdivision 5, is amended to read: 
           Subd. 5.  [MANDATE.] (a) A public utility, as defined in 
        section 216B.02, subdivision 4, that operates a nuclear-powered 
        electric generating plant within this state must construct and 
        operate, purchase, or contract to construct and operate (1) by 
        December 31, 1998, 50 megawatts of electric energy installed 
        capacity generated by farm-grown closed-loop biomass scheduled 
        to be operational by December 31, 2001; and (2) by December 31, 
        1998, an additional 75 megawatts of installed capacity so 
        generated scheduled to be operational by December 31, 2002.  
           (b) Of the 125 megawatts of biomass electricity installed 
        capacity required under this subdivision, no more than 50 
        megawatts of this capacity may be provided by a facility that 
        uses poultry litter as its primary fuel source and any such 
        facility:  
           (1) need not use biomass that complies with the definition 
        in subdivision 1; 
           (2) must enter into a contract with the public utility for 
        such capacity, that has an average purchase price per megawatt 
        hour over the life of the contract that is equal to or less than 
        the average purchase price per megawatt hour over the life of 
        the contract in contracts approved by the public utilities 
        commission before April 1, 2000, to satisfy the mandate of this 
        section, and file that contract with the public utilities 
        commission prior to September 1, 2000; and 
           (3) such capacity must be scheduled to be operational by 
        December 31, 2002.  
           (c) Of the total 125 megawatts of biomass electric energy 
        installed capacity required under this section, no more than 75 
        megawatts may be provided by a single project.  
           (d) Of the 75 megawatts of biomass electric energy 
        installed capacity required under paragraph (a), clause (2), no 
        more than 25 megawatts of this capacity may be provided by a St. 
        Paul district heating and cooling system cogeneration facility 
        utilizing waste wood as a primary fuel source.  The St. Paul 
        district heating and cooling system cogeneration facility need 
        not use biomass that complies with the definition in subdivision 
        1.  
           (e) The public utility must accept and consider on an equal 
        basis with other biomass proposals: 
           (1) a proposal to satisfy the requirements of this section 
        that includes a project that exceeds the megawatt capacity 
        requirements of either paragraph (a), clause (1) or (2), and 
        that proposes to sell the excess capacity to the public utility 
        or to other purchasers; and 
           (2) a proposal for a new facility to satisfy more than ten 
        but not more than 20 megawatts of the electrical generation 
        requirements by a small business-sponsored independent power 
        producer facility to be located within the northern quarter of 
        the state, which means the area located north of Constitutional 
        Route No. 8 as described in section 161.114, subdivision 2, and 
        that utilizes biomass residue wood, sawdust, bark, chipped wood, 
        or brush to generate electricity.  A facility described in this 
        clause is not required to utilize biomass complying with the 
        definition in subdivision 1, but must have the capacity required 
        by this clause operational by December 31, 2002. 
           (e) (f) If a public utility files a contract with the 
        commission for electric energy installed capacity that uses 
        poultry litter as its primary fuel source, the commission must 
        do a preliminary review of the contract to determine if it meets 
        the purchase price criteria provided in paragraph (b), clause 
        (2), of this subdivision.  The commission shall perform its 
        review and advise the parties of its determination within 30 
        days of filing of such a contract by a public utility.  A public 
        utility may submit by September 1, 2000, a revised contract to 
        address the commission's preliminary determination.  
           (f) (g) The commission shall finally approve, modify, or 
        disapprove no later than July 1, 2001, all contracts submitted 
        by a public utility as of September 1, 2000, to meet the mandate 
        set forth in this subdivision.  
           (g) (h) If a public utility subject to this section 
        exercises an option to increase the generating capacity of a 
        project in a contract approved by the commission prior to April 
        25, 2000, to satisfy the mandate in this subdivision, the public 
        utility must notify the commission by September 1, 2000, that it 
        has exercised the option and include in the notice the amount of 
        additional megawatts to be generated under the option 
        exercised.  Any review by the commission of the project after 
        exercise of such an option shall be based on the same criteria 
        used to review the existing contract. 
           (i) A facility specified in this subdivision qualifies for 
        exemption from property taxation under section 272.02, 
        subdivision 43. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 14.  Minnesota Statutes 2000, section 271.01, 
        subdivision 5, is amended to read: 
           Subd. 5.  [JURISDICTION.] The tax court shall have 
        statewide jurisdiction.  Except for an appeal to the supreme 
        court or any other appeal allowed under this subdivision, the 
        tax court shall be the sole, exclusive, and final authority for 
        the hearing and determination of all questions of law and fact 
        arising under the tax laws of the state, as defined in this 
        subdivision, in those cases that have been appealed to the tax 
        court and in any case that has been transferred by the district 
        court to the tax court.  The tax court shall have no 
        jurisdiction in any case that does not arise under the tax laws 
        of the state or in any criminal case or in any case determining 
        or granting title to real property or in any case that is under 
        the probate jurisdiction of the district court.  The small 
        claims division of the tax court shall have no jurisdiction in 
        any case dealing with property valuation or assessment for 
        property tax purposes until the taxpayer has appealed the 
        valuation or assessment to the county board of equalization, and 
        in those towns and cities which have not transferred their 
        duties to the county, the town or city board of equalization, 
        except for:  (i) those taxpayers whose original assessments are 
        determined by the commissioner of revenue; and (ii) those 
        taxpayers appealing a denial of a current year application for 
        the homestead classification for their property and the denial 
        was not reflected on a valuation notice issued in the year; and 
        (iii) any case dealing with property valuation, assessment, or 
        taxation for property tax purposes and meeting the 
        jurisdictional requirements of section 271.21, subdivision 2, 
        paragraph (c).  The tax court shall have no jurisdiction in any 
        case involving an order of the state board of equalization 
        unless a taxpayer contests the valuation of property.  Laws 
        governing taxes, aids, and related matters administered by the 
        commissioner of revenue, laws dealing with property valuation, 
        assessment or taxation of property for property tax purposes, 
        and any other laws that contain provisions authorizing review of 
        taxes, aids, and related matters by the tax court shall be 
        considered tax laws of this state subject to the jurisdiction of 
        the tax court.  This subdivision shall not be construed to 
        prevent an appeal, as provided by law, to an administrative 
        agency, board of equalization, review under section 274.13, 
        subdivision 1c, or to the commissioner of revenue.  Wherever 
        used in this chapter, the term commissioner shall mean the 
        commissioner of revenue, unless otherwise specified. 
           [EFFECTIVE DATE.] This section is effective for the 2002 
        assessment, and thereafter. 
           Sec. 15.  Minnesota Statutes 2000, section 271.21, 
        subdivision 2, is amended to read: 
           Subd. 2.  [JURISDICTION.] At the election of the taxpayer, 
        the small claims division shall have jurisdiction only in the 
        following matters: 
           (a) cases involving valuation, assessment, or taxation of 
        real or personal property, if the taxpayer has satisfied the 
        requirements of section 271.01, subdivision 5, and:  (i) the 
        issue is a denial of a current year application for the 
        homestead classification for the taxpayer's property and the 
        denial was not reflected on a valuation notice issued in the 
        year; or (ii) in the case of nonhomestead property, the 
        assessor's estimated market value is less than $100,000; or 
           (b) any other case concerning the tax laws as defined in 
        section 271.01, subdivision 5, in which the amount in 
        controversy does not exceed $5,000, including penalty and 
        interest; or 
           (c) cases involving valuation, assessment, or taxation of 
        real or personal property if: 
           (i) the issue is a denial of a current year application for 
        the homestead classification for the taxpayer's property; 
           (ii) only one parcel is included in the petition, the 
        entire parcel is classified as homestead 1a or 1b pursuant to 
        section 273.13, and the parcel contains no more than one 
        dwelling unit; or 
           (iii) the assessor's estimated market value of the property 
        included in the petition is less than $300,000. 
           [EFFECTIVE DATE.] This section is effective for the 2002 
        assessment, and thereafter. 
           Sec. 16.  Minnesota Statutes 2000, section 272.02, 
        subdivision 22, is amended to read: 
           Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] (a) Small 
        scale wind energy conversion systems installed after January 1, 
        1991, and used as an electric power source are exempt. 
           "Small scale wind energy conversion systems" are wind 
        energy conversion systems, as defined in section 216C.06, 
        subdivision 12, including the foundation or support pad, which 
        (i) are used as an electric power source; (ii) are located 
        within one county and owned by the same owner; and (iii) produce 
        two megawatts or less of electricity as measured by nameplate 
        ratings. 
           (b) Medium scale wind energy conversion systems installed 
        after January 1, 1991, are treated as follows:  (i) the 
        foundation and support pad are taxable; (ii) the associated 
        supporting and protective structures are exempt for the first 
        five assessment years after they have been constructed, and 
        thereafter, 30 percent of the market value of the associated 
        supporting and protective structures are taxable; and (iii) the 
        turbines, blades, transformers, and its related equipment, are 
        exempt.  "Medium scale wind energy conversion systems" are wind 
        energy conversion systems as defined in section 216C.06, 
        subdivision 12, including the foundation or support pad, which:  
        (i) are used as an electric power source; (ii) are located 
        within one county and owned by the same owner; and (iii) produce 
        more than two but equal to or less than 12 megawatts of energy 
        as measured by nameplate ratings. 
           (c) Large scale wind energy conversion systems installed 
        after January 1, 1991, are treated as follows:  25 percent of 
        the market value of all property is taxable, including (i) the 
        foundation and support pad; (ii) the associated supporting and 
        protective structures; and (iii) the turbines, blades, 
        transformers, and its related equipment.  "Large scale wind 
        energy conversion systems" are wind energy conversion systems as 
        defined in section 216C.06, subdivision 12, including the 
        foundation or support pad, which (i) are used as an electric 
        power source; and (ii) produce more than 12 megawatts of energy 
        as measured by nameplate ratings. 
           (d) The total size of a wind energy conversion system under 
        this subdivision shall be determined according to this paragraph.
        Unless the systems are interconnected with different 
        distribution systems, the nameplate capacity of one wind energy 
        conversion system shall be combined with the nameplate capacity 
        of any other wind energy conversion system that is: 
           (1) located within five miles of the wind energy conversion 
        system; 
           (2) constructed within the same calendar year as the wind 
        energy conversion system; and 
           (3) under common ownership.  
           In the case of a dispute, the commissioner of commerce 
        shall determine the total size of the system, and shall draw all 
        reasonable inferences in favor of combining the systems. 
           (e) In making a determination under paragraph (d), the 
        commissioner of commerce may determine that two wind energy 
        conversion systems are under common ownership when the 
        underlying ownership structure contains similar persons or 
        entities, even if the ownership shares differ between the two 
        systems.  Wind energy conversion systems are not under common 
        ownership solely because the same person or entity provided 
        equity financing for the systems. 
           [EFFECTIVE DATE.] This section is effective for wind energy 
        conversion systems installed after January 1, 2001. 
           Sec. 17.  Minnesota Statutes 2000, section 272.02, is 
        amended by adding a subdivision to read: 
           Subd. 46.  [RESIDENTIAL BUILDINGS ON TEMPORARY SITES.] A 
        newly constructed building that is situated on real property is 
        exempt if it is: 
           (1) intended for future residential occupancy; 
           (2) on a temporary foundation and intended to be moved; 
           (3) not used as a model or for any other business purposes; 
           (4) not connected to any utilities; and 
           (5) located on land that will not be sold with the building.
           The exemption under this subdivision is allowable for only 
        one assessment year after the date of the initial construction 
        of the building. 
           [EFFECTIVE DATE.] This section is effective for assessment 
        year 2001 and thereafter. 
           Sec. 18.  Minnesota Statutes 2000, section 272.02, is 
        amended by adding a subdivision to read: 
           Subd. 47.  [POULTRY LITTER BIOMASS GENERATION FACILITY; 
        PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
        attached machinery and other personal property which is part of 
        an electrical generating facility that meets the requirements of 
        this subdivision is exempt.  At the time of construction, the 
        facility must: 
           (1) be designed to utilize poultry litter as a primary fuel 
        source; and 
           (2) be constructed for the purpose of generating power at 
        the facility that will be sold pursuant to a contract approved 
        by the public utilities commission in accordance with the 
        biomass mandate imposed under section 216B.2424. 
           Construction of the facility must be commenced after 
        January 1, 2000, and before December 31, 2002.  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. 19.  Minnesota Statutes 2000, section 272.02, is 
        amended by adding a subdivision to read: 
           Subd. 48.  [WASTE TIRE COGENERATION FACILITY; PERSONAL 
        PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
        machinery and other personal property which is part of an 
        electric generating facility that meets the requirements of this 
        subdivision is exempt.  At the time of construction, the 
        facility must: 
           (1) be designed to utilize waste tires as a primary fuel 
        source; and 
           (2) be a cogeneration electric generating facility of 15 to 
        25 megawatts of installed 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. 20.  Minnesota Statutes 2000, section 272.02, is 
        amended by adding a subdivision to read: 
           Subd. 49.  [AGRICULTURAL HISTORICAL SOCIETY 
        PROPERTY.] Property is exempt from taxation if it is owned by a 
        nonprofit charitable or educational organization that qualifies 
        for exemption under section 501(c)(3) of the Internal Revenue 
        Code of 1986, as amended through December 31, 2000, and meets 
        the following criteria: 
           (1) the property is primarily used for storing and 
        exhibiting tools, equipment, and artifacts useful in providing 
        an understanding of local or regional agricultural history.  
        Primary use is determined each year based on the number of days 
        the property is used solely for storage and exhibition purposes; 
           (2) the property is limited to a maximum of 20 acres per 
        owner per county, but includes the land and any taxable 
        structures, fixtures, and equipment on the land; 
           (3) the property is not used for a revenue-producing 
        activity for more than ten days in each calendar year; and 
           (4) the property is not used for residential purposes on 
        either a temporary or permanent basis. 
           [EFFECTIVE DATE.] This section is effective for assessment 
        year 2001 and thereafter. 
           Sec. 21.  Minnesota Statutes 2000, section 272.02, is 
        amended by adding a subdivision to read: 
           Subd. 50.  [BIOMASS ELECTRICAL GENERATION FACILITY; 
        PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
        attached machinery and other personal property which is part of 
        an electrical generating facility that meets the requirements of 
        this subdivision is exempt.  At the time of construction, the 
        facility must: 
           (1) be designed to utilize biomass as established in 
        section 216B.2424 as a primary fuel source; and 
           (2) be constructed for the purpose of generating power at 
        the facility that will be sold pursuant to a contract approved 
        by the public utilities commission in accordance with the 
        biomass mandate imposed under section 216B.2424.  
           Construction of the facility must be commenced after 
        January 1, 2000, and before December 31, 2002.  Property 
        eligible for this exemption does not include electric 
        transmission lines and interconnections or gas pipelines and 
        interconnections appurtenant to the property or facility.  
           [EFFECTIVE DATE.] This section is effective for assessment 
        year 2001 and thereafter. 
           Sec. 22.  [272.028] [PAYMENT IN LIEU OF PERSONAL PROPERTY 
        TAX; WIND GENERATION FACILITIES.] 
           A developer of a new or existing medium or large scale wind 
        energy conversion system, as defined under section 272.02, 
        subdivision 22, paragraphs (b) and (c), may negotiate with the 
        city or town and the county where the wind energy conversion 
        system is located to establish a payment in lieu of tax on 
        personal property used to generate electric power.  The in lieu 
        payment is to provide fees or compensation to the host 
        jurisdictions to maintain public infrastructure and services.  
        The payment in lieu of personal property tax may be based on 
        production capacity, historical production, or other factors 
        agreed upon by the parties.  The payment in lieu of tax 
        agreement must be signed by the parties and filed with the 
        commissioner of revenue and the county recorder.  Upon execution 
        and filing of the agreement, the personal property to which the 
        in lieu payment applies shall be deemed exempt from tax under 
        section 272.02, subdivision 22, paragraphs (b) and (c).  This 
        exemption shall be effective for the assessment year in which 
        the in lieu payment is agreed upon and shall remain exempt for 
        the same duration as the in lieu payments are in effect. 
           Sec. 23.  Minnesota Statutes 2000, section 273.11, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [LIMITED MARKET VALUE.] In the case of all 
        property classified as agricultural homestead or nonhomestead, 
        residential homestead or nonhomestead, timber, or noncommercial 
        seasonal recreational residential, the assessor shall compare 
        the value with that the taxable portion of the value determined 
        in the preceding assessment.  The amount of the increase entered 
        in the current assessment shall not exceed the greater of (1) 
        8.5 percent of the value in the preceding assessment, or (2) 15 
        percent of the difference between the current assessment and the 
        preceding assessment. 
           For assessment year 2002, the amount of the increase shall 
        not exceed the greater of (1) 10 percent of the value in the 
        preceding assessment, or (2) 15 percent of the difference 
        between the current assessment and the preceding assessment. 
           For assessment year 2003, the amount of the increase shall 
        not exceed the greater of (1) 12 percent of the value in the 
        preceding assessment, or (2) 20 percent of the difference 
        between the current assessment and the preceding assessment. 
           For assessment year 2004, the amount of the increase shall 
        not exceed the greater of (1) 15 percent of the value in the 
        preceding assessment, or (2) 25 percent of the difference 
        between the current assessment and the preceding assessment. 
           For assessment year 2005, the amount of the increase shall 
        not exceed the greater of (1) 15 percent of the value in the 
        preceding assessment, or (2) 33 percent of the difference 
        between the current assessment and the preceding assessment.  
           For assessment year 2006, the amount of the increase shall 
        not exceed the greater of (1) 15 percent of the value in the 
        preceding assessment, or (2) 50 percent of the difference 
        between the current assessment and the preceding assessment. 
           This limitation shall not apply to increases in value due 
        to improvements.  For purposes of this subdivision, the term 
        "assessment" means the value prior to any exclusion under 
        subdivision 16. 
           The provisions of this subdivision shall be in effect only 
        through assessment year 2001 2006 as provided in this 
        subdivision. 
           For purposes of the assessment/sales ratio study conducted 
        under section 127A.48, and the computation of state aids paid 
        under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 
        477A, market values and net tax capacities determined under this 
        subdivision and subdivision 16, shall be used. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment.  The change to this section which 
        adds timber property is initially effective for the 2001 
        assessment. 
           Sec. 24.  Minnesota Statutes 2000, section 273.11, 
        subdivision 14, is amended to read: 
           Subd. 14.  [VACANT LAND PLATTED ON OR AFTER BEFORE AUGUST 
        1, 1991 2001.] (a) All land platted on or after before August 1, 
        1991 2001, and not improved with a permanent structure, shall be 
        assessed as provided in this subdivision.  The assessor shall 
        determine the market value of each individual lot based upon the 
        highest and best use of the property as unplatted land.  In 
        establishing the market value of the property, the assessor 
        shall consider the sale price of the unplatted land or 
        comparable sales of unplatted land of similar use and similar 
        availability of public utilities. 
           (b) The market value determined in paragraph (a) shall be 
        increased as follows for each of the three assessment years 
        immediately following the final approval of the plat:  one-third 
        of the difference between the property's unplatted market value 
        as determined under paragraph (a) and the market value based 
        upon the highest and best use of the land as platted property 
        shall be added in each of the three subsequent assessment years. 
           (c) Any increase in market value after the first assessment 
        year following the plat's final approval shall be added to the 
        property's market value in the next assessment year.  
        Notwithstanding paragraph (b), if construction begins before the 
        expiration of the three years in paragraph (b), that lot shall 
        be eligible for revaluation in the next assessment year.  The 
        market value of a platted lot determined under this subdivision 
        shall not exceed the value of that lot based upon the highest 
        and best use of the property as platted land. 
           [EFFECTIVE DATE.] This section is effective for land 
        platted before August 1, 2001. 
           Sec. 25.  Minnesota Statutes 2000, section 273.11, is 
        amended by adding a subdivision to read: 
           Subd. 14a.  [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 
        2001; LOCATED IN METROPOLITAN COUNTIES.] (a) All land platted on 
        or after August 1, 2001, located in a metropolitan county, and 
        not improved with a permanent structure, shall be assessed as 
        provided in this subdivision.  The assessor shall determine the 
        market value of each individual lot based upon the highest and 
        best use of the property as unplatted land.  In establishing the 
        market value of the property, the assessor shall consider the 
        sale price of the unplatted land or comparable sales of 
        unplatted land of similar use and similar availability of public 
        utilities. 
           (b) The market value determined in paragraph (a) shall be 
        increased as follows for each of the three assessment years 
        immediately following the final approval of the plat:  one-third 
        of the difference between the property's unplatted market value 
        as determined under paragraph (a) and the market value based 
        upon the highest and best use of the land as platted property 
        shall be added in each of the three subsequent assessment years. 
           (c) Any increase in market value after the first assessment 
        year following the plat's final approval shall be added to the 
        property's market value in the next assessment year.  
        Notwithstanding paragraph (b), if construction begins before the 
        expiration of the three years in paragraph (b), that lot shall 
        be eligible for revaluation in the next assessment year.  The 
        market value of a platted lot determined under this subdivision 
        shall not exceed the value of that lot based upon the highest 
        and best use of the property as platted land. 
           (d) For purposes of this section, "metropolitan county" 
        means the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 
        Scott, and Washington. 
           [EFFECTIVE DATE.] This section is effective for land 
        platted after July 31, 2001. 
           Sec. 26.  Minnesota Statutes 2000, section 273.11, is 
        amended by adding a subdivision to read: 
           Subd. 14b.  [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 
        2001; LOCATED IN NONMETROPOLITAN COUNTIES.] (a) All land platted 
        on or after August 1, 2001, located in a nonmetropolitan county, 
        and not improved with a permanent structure, shall be assessed 
        as provided in this subdivision.  The assessor shall determine 
        the market value of each individual lot based upon the highest 
        and best use of the property as unplatted land.  In establishing 
        the market value of the property, the assessor shall consider 
        the sale price of the unplatted land or comparable sales of 
        unplatted land of similar use and similar availability of public 
        utilities. 
           (b) The market value determined in paragraph (a) shall be 
        increased as follows for each of the seven assessment years 
        immediately following the final approval of the plat:  
        one-seventh of the difference between the property's unplatted 
        market value as determined under paragraph (a) and the market 
        value based upon the highest and best use of the land as platted 
        property shall be added in each of the seven subsequent 
        assessment years. 
           (c) Any increase in market value after the first assessment 
        year following the plat's final approval shall be added to the 
        property's market value in the next assessment year.  
        Notwithstanding paragraph (b), if construction begins before the 
        expiration of the seven years in paragraph (b), that lot shall 
        be eligible for revaluation in the next assessment year.  The 
        market value of a platted lot determined under this subdivision 
        shall not exceed the value of that lot based upon the highest 
        and best use of the property as platted land. 
           [EFFECTIVE DATE.] This section is effective for land 
        platted after July 31, 2001. 
           Sec. 27.  Minnesota Statutes 2000, 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 held by a trustee under a trust is eligible for 
        homestead classification if the 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, 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, or an elderly assisted living facility property 
        as defined in section 273.13, subdivision 25a, 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, or an elderly 
        assisted living facility property as defined in section 273.13, 
        subdivision 25a, 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 
        levied in 2001, payable in 2002, and thereafter. 
           Sec. 28.  Minnesota Statutes 2000, 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.] (a) Each family farm corporation, each 
        joint family 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 family farm corporation, 
        joint family farm venture, limited liability company, or 
        partnership operating a family farm.  Homestead treatment 
        applies even if legal title to the property is in the name of 
        the family farm corporation, joint family farm venture, limited 
        liability company, or partnership operating the family farm, and 
        not in the name of the person residing on it. 
           "Family farm corporation," "family farm," and "farm 
        partnership operating a family farm" have the meanings given in 
        section 500.24, except that the number of allowable 
        shareholders, members, or partners under this subdivision shall 
        not exceed 12.  "Limited liability company" has the meaning 
        contained in section sections 322B.03, subdivision 28, and 
        500.24, subdivision 2, paragraphs (l) and (m).  "Joint family 
        farm venture" means a cooperative agreement among two or more 
        farm enterprises authorized to operate a family farm land under 
        section 500.24. 
           (b) In addition to property specified in paragraph (a), any 
        other residences owned by family farm corporations, joint family 
        farm ventures, limited liability companies, or 
        partnerships operating a family farm described in paragraph (a) 
        which are located on agricultural land and occupied as 
        homesteads by its shareholders, members, or partners who are 
        actively engaged in farming on behalf of the that 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 that is owned by a member, 
        partner, or shareholder of a family farm corporation or 
        joint family 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 
        operating a family farm, or joint farm venture, as defined in 
        paragraph (a), is eligible for classification as class 1b or 
        class 2a 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 that 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 family farm 
        venture, limited liability company, or partnership operating a 
        family farm under the lease. 
           [EFFECTIVE DATE.] This section is effective for the 2001 
        assessment, taxes payable in 2002, and thereafter. 
           Sec. 29.  Minnesota Statutes 2000, section 273.124, 
        subdivision 11, is amended to read: 
           Subd. 11.  [LIMITATION ON HOMESTEAD 
        CLASSIFICATION REDUCTIONS.] If the assessor has classified a 
        property as both homestead and nonhomestead, the greater of the 
        value attributable to the portion of the property classified as 
        class 1 or class 2a or the value of the first tier of net class 
        rates provided under section 273.13, subdivision 22, or 23, 
        paragraph (a), is entitled to assessment as a homestead under 
        section 273.13, subdivision 22 or 23.  The limitation in this 
        subdivision does not apply to buildings containing fewer than 
        four residential units or to a single rented or leased dwelling 
        unit located within or attached to a private garage or similar 
        structure owned by the owner of a homestead and located on the 
        premises of that homestead.  
           If the assessor has classified a property as both homestead 
        and nonhomestead, the reductions in tax provided under sections 
        273.135 and 273.1391 apply to the value of both the homestead 
        and the nonhomestead portions of the property. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 30.  Minnesota Statutes 2000, section 273.124, 
        subdivision 13, is amended to read: 
           Subd. 13.  [HOMESTEAD APPLICATION.] (a) A person who meets 
        the homestead requirements under subdivision 1 must file a 
        homestead application with the county assessor to initially 
        obtain homestead classification. 
           (b) On or before January 2, 1993, each county assessor 
        shall mail a homestead application to the owner of each parcel 
        of property within the county which was classified as homestead 
        for the 1992 assessment year.  The format and contents of a 
        uniform homestead application shall be prescribed by the 
        commissioner of revenue.  The commissioner shall consult with 
        the chairs of the house and senate tax committees on the 
        contents of the homestead application form.  The application 
        must clearly inform the taxpayer that this application must be 
        signed by all owners who occupy the property or by the 
        qualifying relative and returned to the county assessor in order 
        for the property to continue receiving homestead treatment.  The 
        envelope containing the homestead application shall clearly 
        identify its contents and alert the taxpayer of its necessary 
        immediate response. 
           (c) Every property owner applying for homestead 
        classification must furnish to the county assessor the social 
        security number of each occupant who is listed as an owner of 
        the property on the deed of record, the name and address of each 
        owner who does not occupy the property, and the name and social 
        security number of each owner's spouse who occupies the 
        property.  The application must be signed by each owner who 
        occupies the property and by each owner's spouse who occupies 
        the property, or, in the case of property that qualifies as a 
        homestead under subdivision 1, paragraph (c), by the qualifying 
        relative. 
           If a property owner occupies a homestead, the property 
        owner's spouse may not claim another property as a homestead 
        unless the property owner and the property owner's spouse file 
        with the assessor an affidavit or other proof required by the 
        assessor stating that the property qualifies as a homestead 
        under subdivision 1, paragraph (e). 
           Owners or spouses occupying residences owned by their 
        spouses and previously occupied with the other spouse, either of 
        whom fail to include the other spouse's name and social security 
        number on the homestead application or provide the affidavits or 
        other proof requested, will be deemed to have elected to receive 
        only partial homestead treatment of their residence.  The 
        remainder of the residence will be classified as nonhomestead 
        residential.  When an owner or spouse's name and social security 
        number appear on homestead applications for two separate 
        residences and only one application is signed, the owner or 
        spouse will be deemed to have elected to homestead the residence 
        for which the application was signed. 
           The social security numbers or affidavits or other proofs 
        of the property owners and spouses are private data on 
        individuals as defined by section 13.02, subdivision 12, but, 
        notwithstanding that section, the private data may be disclosed 
        to the commissioner of revenue, or, for purposes of proceeding 
        under the Revenue Recapture Act to recover personal property 
        taxes owing, to the county treasurer. 
           (d) If residential real estate is occupied and used for 
        purposes of a homestead by a relative of the owner and qualifies 
        for a homestead under subdivision 1, paragraph (c), in order for 
        the property to receive homestead status, a homestead 
        application must be filed with the assessor.  The social 
        security number of each relative occupying the property and the 
        social security number of each owner who is related to an 
        occupant of the property shall be required on the homestead 
        application filed under this subdivision.  If a different 
        relative of the owner subsequently occupies the property, the 
        owner of the property must notify the assessor within 30 days of 
        the change in occupancy.  The social security number of a 
        relative occupying the property is private data on individuals 
        as defined by section 13.02, subdivision 12, but may be 
        disclosed to the commissioner of revenue.  
           (e) The homestead application shall also notify the 
        property owners that the application filed under this section 
        will not be mailed annually and that if the property is granted 
        homestead status for the 1993 assessment, or any assessment year 
        thereafter, that same property shall remain classified as 
        homestead until the property is sold or transferred to another 
        person, or the owners, the spouse of the owner, or the relatives 
        no longer use the property as their homestead.  Upon the sale or 
        transfer of the homestead property, a certificate of value must 
        be timely filed with the county auditor as provided under 
        section 272.115.  Failure to notify the assessor within 30 days 
        that the property has been sold, transferred, or that the owner, 
        the spouse of the owner, or the relative is no longer occupying 
        the property as a homestead, shall result in the penalty 
        provided under this subdivision and the property will lose its 
        current homestead status. 
           (f) If the homestead application is not returned within 30 
        days, the county will send a second application to the present 
        owners of record.  The notice of proposed property taxes 
        prepared under section 275.065, subdivision 3, shall reflect the 
        property's classification.  Beginning with assessment year 1993 
        for all properties, if a homestead application has not been 
        filed with the county by December 15, the assessor shall 
        classify the property as nonhomestead for the current assessment 
        year for taxes payable in the following year, provided that the 
        owner may be entitled to receive the homestead classification by 
        proper application under section 375.192. 
           (g) At the request of the commissioner, each county must 
        give the commissioner a list that includes the name and social 
        security number of each property owner and the property owner's 
        spouse occupying the property, or relative of a property owner, 
        applying for homestead classification under this subdivision.  
        The commissioner shall use the information provided on the lists 
        as appropriate under the law, including for the detection of 
        improper claims by owners, or relatives of owners, under chapter 
        290A.  
           (h) If the commissioner finds that a property owner may be 
        claiming a fraudulent homestead, the commissioner shall notify 
        the appropriate counties.  Within 90 days of the notification, 
        the county assessor shall investigate to determine if the 
        homestead classification was properly claimed.  If the property 
        owner does not qualify, the county assessor shall notify the 
        county auditor who will determine the amount of homestead 
        benefits that had been improperly allowed.  For the purpose of 
        this section, "homestead benefits" means the tax reduction 
        resulting from the classification as a homestead under section 
        273.13, the taconite homestead credit under section 273.135, the 
        residential homestead and agricultural homestead credits under 
        section 273.1384, and the supplemental homestead credit under 
        section 273.1391. 
           The county auditor shall send a notice to the person who 
        owned the affected property at the time the homestead 
        application related to the improper homestead was filed, 
        demanding reimbursement of the homestead benefits plus a penalty 
        equal to 100 percent of the homestead benefits.  The person 
        notified may appeal the county's determination by serving copies 
        of a petition for review with county officials as provided in 
        section 278.01 and filing proof of service as provided in 
        section 278.01 with the Minnesota tax court within 60 days of 
        the date of the notice from the county.  Procedurally, the 
        appeal is governed by the provisions in chapter 271 which apply 
        to the appeal of a property tax assessment or levy, but without 
        requiring any prepayment of the amount in controversy.  If the 
        amount of homestead benefits and penalty is not paid within 60 
        days, and if no appeal has been filed, the county auditor shall 
        certify the amount of taxes and penalty to the county 
        treasurer.  The county treasurer will add interest to the unpaid 
        homestead benefits and penalty amounts at the rate provided in 
        section 279.03 for real property taxes becoming delinquent in 
        the calendar year during which the amount remains unpaid.  
        Interest may be assessed for the period beginning 60 days after 
        demand for payment was made. 
           If the person notified is the current owner of the 
        property, the treasurer may add the total amount of homestead 
        benefits, penalty, interest, and costs to the ad valorem taxes 
        otherwise payable on the property by including the amounts on 
        the property tax statements under section 276.04, subdivision 
        3.  The amounts added under this paragraph to the ad valorem 
        taxes shall include interest accrued through December 31 of the 
        year preceding the taxes payable year for which the amounts are 
        first added.  These amounts, when added to the property tax 
        statement, become subject to all the laws for the enforcement of 
        real or personal property taxes for that year, and for any 
        subsequent year. 
           If the person notified is not the current owner of the 
        property, the treasurer may collect the amounts due under the 
        Revenue Recapture Act in chapter 270A, or use any of the powers 
        granted in sections 277.20 and 277.21 without exclusion, to 
        enforce payment of the homestead benefits, penalty, interest, 
        and costs, as if those amounts were delinquent tax obligations 
        of the person who owned the property at the time the application 
        related to the improperly allowed homestead was filed.  The 
        treasurer may relieve a prior owner of personal liability for 
        the homestead benefits, penalty, interest, and costs, and 
        instead extend those amounts on the tax lists against the 
        property as provided in this paragraph to the extent that the 
        current owner agrees in writing.  On all demands, billings, 
        property tax statements, and related correspondence, the county 
        must list and state separately the amounts of homestead 
        benefits, penalty, interest and costs being demanded, billed or 
        assessed. 
           (i) Any amount of homestead benefits recovered by the 
        county from the property owner shall be distributed to the 
        county, city or town, and school district where the property is 
        located in the same proportion that each taxing district's levy 
        was to the total of the three taxing districts' levy for the 
        current year.  Any amount recovered attributable to taconite 
        homestead credit shall be transmitted to the St. Louis county 
        auditor to be deposited in the taconite property tax relief 
        account.  Any amount recovered that is attributable to 
        supplemental homestead credit is to be transmitted to the 
        commissioner of revenue for deposit in the general fund of the 
        state treasury.  The total amount of penalty collected must be 
        deposited in the county general fund. 
           (j) If a property owner has applied for more than one 
        homestead and the county assessors cannot determine which 
        property should be classified as homestead, the county assessors 
        will refer the information to the commissioner.  The 
        commissioner shall make the determination and notify the 
        counties within 60 days. 
           (k) In addition to lists of homestead properties, the 
        commissioner may ask the counties to furnish lists of all 
        properties and the record owners.  The social security numbers 
        and federal identification numbers that are maintained by a 
        county or city assessor for property tax administration 
        purposes, and that may appear on the lists retain their 
        classification as private or nonpublic data; but may be viewed, 
        accessed, and used by the county auditor or treasurer of the 
        same county for the limited purpose of assisting the 
        commissioner in the preparation of microdata samples under 
        section 270.0681. 
           [EFFECTIVE DATE.] This section is effective for homestead 
        applications submitted on or after the day following final 
        enactment. 
           Sec. 31.  Minnesota Statutes 2000, 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, the owner's spouse, or the owner's son or 
        daughter of the owner or owner's spouse, is actively farming the 
        agricultural property, either on the person's own behalf as an 
        individual or on behalf of a partnership operating a family 
        farm, family farm corporation, joint family farm venture, or 
        limited liability company of which the person is a partner, 
        shareholder, or member; 
           (2) both the owner of the agricultural property is a 
        Minnesota resident, and if the owner's son or daughter person 
        who is actively farming the agricultural property under clause 
        (1), that person must also be a are Minnesota 
        resident residents; 
           (3) neither the owner nor the spouse of the owner claims 
        another agricultural homestead in Minnesota; and 
           (4) neither the owner does not live nor the person actively 
        farming the property lives farther than four townships or 
        cities, or a combination of four townships or cities, from the 
        agricultural property, and except that if the owner's son or 
        daughter is actively farming the agricultural property under 
        clause (1), that person must also live within the owner or the 
        owner's spouse is required to live in employer-provided housing, 
        the owner or owner's spouse, whichever is actively farming the 
        agricultural property, may live more than 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) Real property held by a trustee under a trust is 
        eligible for agricultural homestead classification under this 
        paragraph if the qualifications in clause (i) are met, except 
        that "owner" means the grantor of the trust. 
           (ii) (iii) 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 family farm venture, family 
        farm limited liability company, or partnership operating a 
        family farm 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 a shareholder, member, or partner of that entity is 
        actively farming the agricultural property; 
           (2) the that shareholder, member, or partner of who is 
        actively farming the agricultural property is a Minnesota 
        resident; 
           (3) neither the that shareholder, member, or partner, nor 
        the spouse of the that shareholder, member, or partner claims 
        another agricultural homestead in Minnesota; and 
           (4) the that 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. 
           Homestead treatment applies under this paragraph for 
        property leased to a family farm corporation, joint farm 
        venture, limited liability company, or partnership operating a 
        family farm if legal title to the property is in the name of an 
        individual who is a member, shareholder, or partner in the 
        entity. 
           [EFFECTIVE DATE.] This section is effective for the 2001 
        assessment, taxes payable in 2002, and thereafter. 
           Sec. 32.  Minnesota Statutes 2000, section 273.13, 
        subdivision 22, is amended to read: 
           Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
        23 and in paragraphs (b) and (c), real estate which is 
        residential and used for homestead purposes is class 1 1a.  The 
        market value of class 1a property must be determined based upon 
        the value of the house, garage, and land.  
           The first $76,000 $500,000 of market value of class 1a 
        property has a net class rate of one percent of its market 
        value; and the market value of class 1a property that 
        exceeds $76,000 $500,000 has a class rate of 1.65 1.25 percent 
        of its market value. 
           (b) Class 1b property includes homestead real estate or 
        homestead manufactured homes used for the purposes of a 
        homestead by 
           (1) any blind person, or the blind person and the blind 
        person's spouse; or 
           (2) any person, hereinafter referred to as "veteran," who: 
           (i) served in the active military or naval service of the 
        United States; and 
           (ii) is entitled to compensation under the laws and 
        regulations of the United States for permanent and total 
        service-connected disability due to the loss, or loss of use, by 
        reason of amputation, ankylosis, progressive muscular 
        dystrophies, or paralysis, of both lower extremities, such as to 
        preclude motion without the aid of braces, crutches, canes, or a 
        wheelchair; and 
           (iii) has acquired a special housing unit with special 
        fixtures or movable facilities made necessary by the nature of 
        the veteran's disability, or the surviving spouse of the 
        deceased veteran for as long as the surviving spouse retains the 
        special housing unit as a homestead; or 
           (3) any person who: 
           (i) is permanently and totally disabled and 
           (ii) receives 90 percent or more of total household income, 
        as defined in section 290A.03, subdivision 5, from 
           (A) aid from any state as a result of that disability; or 
           (B) supplemental security income for the disabled; or 
           (C) workers' compensation based on a finding of total and 
        permanent disability; or 
           (D) social security disability, including the amount of a 
        disability insurance benefit which is converted to an old age 
        insurance benefit and any subsequent cost of living increases; 
        or 
           (E) aid under the federal Railroad Retirement Act of 1937, 
        United States Code Annotated, title 45, section 228b(a)5; or 
           (F) a pension from any local government retirement fund 
        located in the state of Minnesota as a result of that 
        disability; or 
           (G) pension, annuity, or other income paid as a result of 
        that disability from a private pension or disability plan, 
        including employer, employee, union, and insurance plans and 
           (iii) has household income as defined in section 290A.03, 
        subdivision 5, of $50,000 or less; or 
           (4) any person who is permanently and totally disabled and 
        whose household income as defined in section 290A.03, 
        subdivision 5, is 275 percent or less of the federal poverty 
        level. 
           Property is classified and assessed under clause (4) only 
        if the government agency or income-providing source certifies, 
        upon the request of the homestead occupant, that the homestead 
        occupant satisfies the disability requirements of this paragraph.
           Property is classified and assessed pursuant to clause (1) 
        only if the commissioner of economic security certifies to the 
        assessor that the homestead occupant satisfies the requirements 
        of this paragraph.  
           Permanently and totally disabled for the purpose of this 
        subdivision means a condition which is permanent in nature and 
        totally incapacitates the person from working at an occupation 
        which brings the person an income.  The first $32,000 market 
        value of class 1b property has a net class rate of .45 percent 
        of its market value.  The remaining market value of class 1b 
        property has a net class rate using the rates for class 1 1a or 
        class 2a property, whichever is appropriate, of similar market 
        value.  
           (c) Class 1c property is commercial use real property that 
        abuts a lakeshore line and is devoted to temporary and seasonal 
        residential occupancy for recreational purposes but not devoted 
        to commercial purposes for more than 250 days in the year 
        preceding the year of assessment, and that includes a portion 
        used as a homestead by the owner, which includes a dwelling 
        occupied as a homestead by a shareholder of a corporation that 
        owns the resort or a partner in a partnership that owns the 
        resort, even if the title to the homestead is held by the 
        corporation or partnership.  For purposes of this clause, 
        property is devoted to a commercial purpose on a specific day if 
        any portion of the property, excluding the portion used 
        exclusively as a homestead, is used for residential occupancy 
        and a fee is charged for residential occupancy.  The first 
        $500,000 of market value of class 1c property has a class rate 
        of one percent of total, and the remaining market value of class 
        1c property has a class rate of one percent, with the following 
        limitation:  the area of the property must not exceed 100 feet 
        of lakeshore footage for each cabin or campsite located on the 
        property up to a total of 800 feet and 500 feet in depth, 
        measured away from the lakeshore.  If any portion of the class 
        1c resort property is classified as class 4c under subdivision 
        25, the entire property must meet the requirements of 
        subdivision 25, paragraph (d), clause (1), to qualify for class 
        1c treatment under this paragraph. 
           (d) Class 1d property includes structures that meet all of 
        the following criteria: 
           (1) the structure is located on property that is classified 
        as agricultural property under section 273.13, subdivision 23; 
           (2) the structure is occupied exclusively by seasonal farm 
        workers during the time when they work on that farm, and the 
        occupants are not charged rent for the privilege of occupying 
        the property, provided that use of the structure for storage of 
        farm equipment and produce does not disqualify the property from 
        classification under this paragraph; 
           (3) the structure meets all applicable health and safety 
        requirements for the appropriate season; and 
           (4) the structure is not salable as residential property 
        because it does not comply with local ordinances relating to 
        location in relation to streets or roads. 
           The market value of class 1d property has the same class 
        rates as class 1a property under paragraph (a). 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 33.  Minnesota Statutes 2000, section 273.13, 
        subdivision 23, is amended to read: 
           Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
        land including any improvements that is homesteaded.  The market 
        value of the house and garage and immediately surrounding one 
        acre of land has the same class rates as class 1a property under 
        subdivision 22.  The value of the remaining land including 
        improvements up to $115,000 has a net class rate of 0.35 percent 
        of market value.  The value of class 2a property over $115,000 
        of market value up to and including $600,000 market value has a 
        net class rate of 0.8 0.55 percent of market value.  The 
        remaining property over $600,000 market value has a class rate 
        of 1.20 one percent of market value. 
           (b) Class 2b property is (1) real estate, rural in 
        character and used exclusively for growing trees for timber, 
        lumber, and wood and wood products; (2) real estate that is not 
        improved with a structure and is used exclusively for growing 
        trees for timber, lumber, and wood and wood products, if the 
        owner has participated or is participating in a cost-sharing 
        program for afforestation, reforestation, or timber stand 
        improvement on that particular property, administered or 
        coordinated by the commissioner of natural resources; (3) real 
        estate that is nonhomestead agricultural land; or (4) a landing 
        area or public access area of a privately owned public use 
        airport.  Class 2b property has a net class rate of 1.20 one 
        percent of market value. 
           (c) Agricultural land as used in this section means 
        contiguous acreage of ten acres or more, used during the 
        preceding year for agricultural purposes.  "Agricultural 
        purposes" as used in this section means the raising or 
        cultivation of agricultural products or enrollment in the 
        Reinvest in Minnesota program under sections 103F.501 to 
        103F.535 or the federal Conservation Reserve Program as 
        contained in Public Law Number 99-198.  Contiguous acreage on 
        the same parcel, or contiguous acreage on an immediately 
        adjacent parcel under the same ownership, may also qualify as 
        agricultural land, but only if it is pasture, timber, waste, 
        unusable wild land, or land included in state or federal farm 
        programs.  Agricultural classification for property shall be 
        determined excluding the house, garage, and immediately 
        surrounding one acre of land, and shall not be based upon the 
        market value of any residential structures on the parcel or 
        contiguous parcels under the same ownership. 
           (d) Real estate, excluding the house, garage, and 
        immediately surrounding one acre of land, of less than ten acres 
        which is exclusively and intensively used for raising or 
        cultivating agricultural products, shall be considered as 
        agricultural land.  
           Land shall be classified as agricultural even if all or a 
        portion of the agricultural use of that property is the leasing 
        to, or use by another person for agricultural purposes. 
           Classification under this subdivision is not determinative 
        for qualifying under section 273.111. 
           The property classification under this section supersedes, 
        for property tax purposes only, any locally administered 
        agricultural policies or land use restrictions that define 
        minimum or maximum farm acreage. 
           (e) The term "agricultural products" as used in this 
        subdivision includes production for sale of:  
           (1) livestock, dairy animals, dairy products, poultry and 
        poultry products, fur-bearing animals, horticultural and nursery 
        stock described in sections 18.44 to 18.61, fruit of all kinds, 
        vegetables, forage, grains, bees, and apiary products by the 
        owner; 
           (2) fish bred for sale and consumption if the fish breeding 
        occurs on land zoned for agricultural use; 
           (3) the commercial boarding of horses if the boarding is 
        done in conjunction with raising or cultivating agricultural 
        products as defined in clause (1); 
           (4) property which is owned and operated by nonprofit 
        organizations used for equestrian activities, excluding racing; 
           (5) game birds and waterfowl bred and raised for use on a 
        shooting preserve licensed under section 97A.115; 
           (6) insects primarily bred to be used as food for 
        animals; and 
           (7) trees, grown for sale as a crop, and not sold for 
        timber, lumber, wood, or wood products; and 
           (8) maple syrup taken from trees grown by a person licensed 
        by the Minnesota department of agriculture under chapter 28A as 
        a food processor. 
           (f) If a parcel used for agricultural purposes is also used 
        for commercial or industrial purposes, including but not limited 
        to:  
           (1) wholesale and retail sales; 
           (2) processing of raw agricultural products or other goods; 
           (3) warehousing or storage of processed goods; and 
           (4) office facilities for the support of the activities 
        enumerated in clauses (1), (2), and (3), 
        the assessor shall classify the part of the parcel used for 
        agricultural purposes as class 1b, 2a, or 2b, whichever is 
        appropriate, and the remainder in the class appropriate to its 
        use.  The grading, sorting, and packaging of raw agricultural 
        products for first sale is considered an agricultural purpose.  
        A greenhouse or other building where horticultural or nursery 
        products are grown that is also used for the conduct of retail 
        sales must be classified as agricultural if it is primarily used 
        for the growing of horticultural or nursery products from seed, 
        cuttings, or roots and occasionally as a showroom for the retail 
        sale of those products.  Use of a greenhouse or building only 
        for the display of already grown horticultural or nursery 
        products does not qualify as an agricultural purpose.  
           The assessor shall determine and list separately on the 
        records the market value of the homestead dwelling and the one 
        acre of land on which that dwelling is located.  If any farm 
        buildings or structures are located on this homesteaded acre of 
        land, their market value shall not be included in this separate 
        determination.  
           (g) To qualify for classification under paragraph (b), 
        clause (4), a privately owned public use airport must be 
        licensed as a public airport under section 360.018.  For 
        purposes of paragraph (b), clause (4), "landing area" means that 
        part of a privately owned public use airport properly cleared, 
        regularly maintained, and made available to the public for use 
        by aircraft and includes runways, taxiways, aprons, and sites 
        upon which are situated landing or navigational aids.  A landing 
        area also includes land underlying both the primary surface and 
        the approach surfaces that comply with all of the following:  
           (i) the land is properly cleared and regularly maintained 
        for the primary purposes of the landing, taking off, and taxiing 
        of aircraft; but that portion of the land that contains 
        facilities for servicing, repair, or maintenance of aircraft is 
        not included as a landing area; 
           (ii) the land is part of the airport property; and 
           (iii) the land is not used for commercial or residential 
        purposes. 
        The land contained in a landing area under paragraph (b), clause 
        (4), must be described and certified by the commissioner of 
        transportation.  The certification is effective until it is 
        modified, or until the airport or landing area no longer meets 
        the requirements of paragraph (b), clause (4).  For purposes of 
        paragraph (b), clause (4), "public access area" means property 
        used as an aircraft parking ramp, apron, or storage hangar, or 
        an arrival and departure building in connection with the airport.
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2001, payable in 2002, and thereafter. 
           Sec. 34.  Minnesota Statutes 2000, 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 1.5 percent of the first tier of market value, 
        and 3.4 2.0 percent of the remaining market value.  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.  
           For purposes of this subdivision, parcels are considered to 
        be contiguous even if they are separated from each other by a 
        road, street, 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 All railroad operating property and all 
        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 a qualifying 
        entity 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 a qualifying 
        entity 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 a qualifying entity.  This reduced 
        class rate applies only if a qualifying entity 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.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 35.  Minnesota Statutes 2000, 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.  The market value 
        of 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 1.8 percent for taxes payable in 2002, 1.5 percent 
        for taxes payable in 2003, and 1.25 percent for taxes payable in 
        2004 and thereafter, except that class 4a property consisting of 
        a structure for which construction commenced after June 30, 
        2001, has a class rate of 1.25 percent of market value for taxes 
        payable in 2003 and subsequent years. 
           (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.  
           The market value of class 4b property has a class rate of 
        1.65 percent of market value 1.5 percent for taxes payable in 
        2002, and 1.25 percent for taxes payable in 2003 and thereafter. 
           (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 property 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 the same class rates as 
        class 1a property under subdivision 22. 
           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; 
           (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 1.5 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) commercial-use 
        seasonal residential recreational property has a class rate of 
        one percent for the first $500,000 of market value, which 
        includes any market value receiving the one percent rate under 
        subdivision 22, and 1.25 percent for the remaining market value, 
        (iv) the market value of property described in clause (4) has a 
        class rate of one percent, and (v) the market value of property 
        described in clauses (2) and (6) has a class rate of 1.25 
        percent.  
           (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 0.9 percent for taxes payable in 2002, and one percent for 
        taxes payable in 2003 and 1.25 percent for taxes payable in 2004 
        and thereafter.  
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 36.  Minnesota Statutes 2000, section 273.13, 
        subdivision 31, is amended to read: 
           Subd. 31.  [CLASS 5.] Class 5 property includes:  
           (1) unmined iron ore and low-grade iron-bearing formations 
        as defined in section 273.14; and 
           (2) all other property not otherwise classified. 
           Class 5 property has a class rate of 3.4 2.0 percent of 
        market value. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 37.  [273.1384] [MARKET VALUE HOMESTEAD CREDITS.] 
           Subdivision 1.  [RESIDENTIAL HOMESTEAD MARKET VALUE 
        CREDIT.] Each county auditor shall determine a homestead credit 
        for each class 1a, 1b, 1c, and 2a homestead property within the 
        county equal to .4 percent of the market value of the property.  
        The amount of homestead credit for a homestead may not exceed 
        $304 and is reduced by .09 percent of the market value in excess 
        of $76,000.  In the case of an agricultural or resort homestead, 
        only the market value of the house, garage, and immediately 
        surrounding one acre of land is eligible in determining the 
        property's homestead credit. 
           Subd. 2.  [AGRICULTURAL HOMESTEAD MARKET VALUE 
        CREDIT.] Property classified as class 2a agricultural homestead 
        is eligible for an agricultural credit.  The credit is equal to 
        0.2 percent of the first $115,000 of the property's market 
        value.  The credit under this subdivision is limited to $230 for 
        each homestead. 
           Subd. 3.  [CREDIT REIMBURSEMENTS.] The county auditor shall 
        determine the tax reductions allowed under this section within 
        the county for each taxes payable year and shall certify that 
        amount to the commissioner of revenue as a part of the abstracts 
        of tax lists submitted by the county auditors under section 
        275.29.  Any prior year adjustments shall also be certified on 
        the abstracts of tax lists.  The commissioner shall review the 
        certifications for accuracy, and may make such changes as are 
        deemed necessary, or return the certification to the county 
        auditor for correction.  The credits under this section must be 
        used to proportionately reduce the net tax capacity-based 
        property tax payable to each local taxing jurisdiction as 
        provided in section 273.1393.  
           Subd. 4.  [PAYMENT.] (a) The commissioner of revenue shall 
        reimburse each local taxing jurisdiction, other than school 
        districts, for the tax reductions granted under this section in 
        two equal installments on October 31 and December 26 of the 
        taxes payable year for which the reductions are granted, 
        including in each payment the prior year adjustments certified 
        on the abstracts for that taxes payable year.  The 
        reimbursements related to tax increments shall be issued in one 
        installment each year on December 26. 
           (b) The commissioner of revenue shall certify the total of 
        the tax reductions granted under this section for each taxes 
        payable year within each school district to the commissioner of 
        the department of children, families, and learning and the 
        commissioner of children, families, and learning shall pay the 
        reimbursement amounts to each school district as provided in 
        section 273.1392. 
           Subd. 5.  [APPROPRIATION.] An amount sufficient to make the 
        payments required by this section to taxing jurisdictions other 
        than school districts is annually appropriated from the general 
        fund to the commissioner of revenue.  An amount sufficient to 
        make the payments required by this section for school districts 
        is annually appropriated from the general fund to the 
        commissioner of children, families, and learning. 
           [EFFECTIVE DATE.] This section is effective for taxes, 
        credits, and reimbursements payable in 2002 and thereafter. 
           Sec. 38.  Minnesota Statutes 2000, section 273.1392, is 
        amended to read: 
           273.1392 [PAYMENT; SCHOOL DISTRICTS.] 
           The amounts of conservation tax credits under section 
        273.119; disaster or emergency reimbursement under section 
        273.123; attached machinery aid under section 273.138; homestead 
        credit under section 273.13 homestead and agricultural credits 
        under section 273.1384; aids and credits under section 273.1398; 
        wetlands reimbursement under section 275.295; enterprise zone 
        property credit payments under section 469.171; and metropolitan 
        agricultural preserve reduction under section 473H.10 for school 
        districts, shall be certified to the department of children, 
        families, and learning by the department of revenue.  The 
        amounts so certified shall be paid according to section 127A.45, 
        subdivisions 9 and 13. 
           [EFFECTIVE DATE.] This section is effective for aids and 
        credits payable in 2002 and thereafter. 
           Sec. 39.  Minnesota Statutes 2000, section 273.1393, is 
        amended to read: 
           273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 
           Notwithstanding any other provisions to the contrary, "net" 
        property taxes are determined by subtracting the credits in the 
        order listed from the gross tax:  
           (1) disaster credit as provided in section 273.123; 
           (2) powerline credit as provided in section 273.42; 
           (3) agricultural preserves credit as provided in section 
        473H.10; 
           (4) enterprise zone credit as provided in section 469.171; 
           (5) disparity reduction credit; 
           (6) conservation tax credit as provided in section 273.119; 
           (7) education homestead credit and agricultural credits as 
        provided in section 273.1382 273.1384; 
           (8) taconite homestead credit as provided in section 
        273.135; and 
           (9) supplemental homestead credit as provided in section 
        273.1391.  
           The combination of all property tax credits must not exceed 
        the gross tax amount.  
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 40.  Minnesota Statutes 2000, section 273.1398, is 
        amended by adding a subdivision to read: 
           Subd. 2e.  [HOMESTEAD AND AGRICULTURAL AID FOR CITIES, 
        TOWNS, AND SPECIAL TAXING DISTRICTS.] Notwithstanding the 
        provisions of subdivision 2, the amount of homestead and 
        agricultural credit aid for a statutory or home rule charter 
        city, town, school district, or special taxing district for aid 
        payable in calendar year 2002 and thereafter is zero. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2002 and future years. 
           Sec. 41.  Minnesota Statutes 2000, section 273.166, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MANUFACTURED HOME HOMESTEAD AND AGRICULTURAL 
        CREDIT AID.] For In calendar year 2002, and each calendar year 
        thereafter, the manufactured home homestead and agricultural 
        credit aid for each taxing jurisdiction equals the taxing 
        jurisdiction's shall be paid to each county under this section 
        in an amount equal to the county's manufactured home homestead 
        and agricultural credit aid determined under this subdivision 
        for the preceding aid payable year times the growth adjustment 
        factor for the jurisdiction plus the net tax capacity adjustment 
        for the jurisdiction county.  Payment will not be made to 
        any taxing jurisdiction county that has ceased to levy a 
        property tax. 
           [EFFECTIVE DATE.] This section is effective for aid paid in 
        2002 and thereafter. 
           Sec. 42.  Minnesota Statutes 2000, section 273.166, 
        subdivision 3, is amended to read: 
           Subd. 3.  [AID CALCULATION.] The commissioner of revenue 
        shall make the calculation required in subdivision 2 and 
        annually pay manufactured home homestead and agricultural credit 
        aid to the local governments counties at the times provided in 
        section 473H.10 for local governments other than school 
        districts.  Aid payments to the school districts must be 
        certified to the commissioner of children, families, and 
        learning and paid under section 273.1392. 
           [EFFECTIVE DATE.] This section is effective for aid paid in 
        2002 and thereafter. 
           Sec. 43.  Minnesota Statutes 2000, section 273.166, 
        subdivision 5, is amended to read: 
           Subd. 5.  [APPROPRIATION.] There is annually appropriated 
        from the general fund to the commissioner of children, families, 
        and learning a sum sufficient to pay the aids provided under 
        this section for school districts, intermediate school 
        districts, or any group of school districts levying as a single 
        taxing entity.  There is annually appropriated from the general 
        fund to the commissioner of revenue a sum sufficient to pay the 
        aids provided under this section to counties, cities, towns, and 
        special taxing districts. 
           [EFFECTIVE DATE.] This section is effective for fiscal year 
        2003 and thereafter. 
           Sec. 44.  Minnesota Statutes 2000, section 273.42, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [STATE TAX ON TRANSMISSION AND DISTRIBUTION 
        LINES.] Notwithstanding section 273.425, the entire tax capacity 
        of property taxed at the average local tax rate under 
        subdivision 1 is subject to the state tax rate provided in 
        section 275.025.  Notwithstanding subdivisions 1 and 2, the 
        entire proceeds of the state tax levy for each such property 
        must be distributed to the state under the procedures provided 
        in chapter 276.  No portion of the proceeds from the state levy 
        on such property is distributed within the county under 
        subdivision 1 or 2. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 45.  Minnesota Statutes 2000, section 275.02, is 
        amended to read: 
           275.02 [STATE LEVY, EXCEPTIONS FOR BONDED DEBT; 
        CERTIFICATION OF TAX RATE.] 
           The A state tax for bonded debt pursuant to the Minnesota 
        Constitution, article XI, shall be levied on the tax capacity of 
        all taxable property in the state.  The rate of the tax shall be 
        certified by the state auditor to each county auditor on or 
        before November 15 1 annually.  The tax under this section is 
        not treated as a local tax rate under 469.177.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 46.  [275.025] [STATE GENERAL TAX.] 
           Subdivision 1.  [LEVY AMOUNT.] The state general levy is 
        levied against commercial-industrial property and seasonal 
        recreational property, as defined in this section.  The state 
        general levy is $592,000,000 for taxes payable in 2002.  For 
        taxes payable in subsequent years, the levy is increased each 
        year by multiplying the amount for the prior year by the sum of 
        one plus the rate of increase, if any, in the implicit price 
        deflator for government consumption expenditures and gross 
        investment for state and local governments prepared by the 
        Bureau of Economic Analysts of the United States Department of 
        Commerce for the 12-month period ending March 31 of the year 
        prior to the year the taxes are payable.  The tax under this 
        section is not treated as a local tax rate under section 469.177 
        and is not the levy of a governmental unit under chapters 276A 
        and 473F.  Beginning in fiscal year 2004, and in each year 
        thereafter, the commissioner of finance shall deposit in an 
        education reserve account, which account is hereby established, 
        the increased amount of the state general levy received for 
        deposit in the general fund for that year over the amount of the 
        state general levy received for deposit in the general fund in 
        fiscal year 2003.  The amounts in the education reserve account 
        do not lapse or cancel each year, but remain until appropriated 
        by law for education aid or higher education funding. 
           Subd. 2.  [COMMERCIAL-INDUSTRIAL TAX CAPACITY.] For the 
        purposes of this section, "commercial-industrial tax capacity" 
        means the tax capacity of all taxable property classified as 
        class 3 or class 5(1) under section 273.13, except for electric 
        generation attached machinery under class 3 and property 
        described in section 473.625.  County commercial-industrial tax 
        capacity amounts are not adjusted for the captured net tax 
        capacity of a tax increment financing district under section 
        469.177, subdivision 2, the net tax capacity of transmission 
        lines deducted from a local government's total net tax capacity 
        under section 273.425, or fiscal disparities contribution and 
        distribution net tax capacities under chapter 276A or 473F. 
           Subd. 3.  [SEASONAL RECREATIONAL TAX CAPACITY.] For the 
        purposes of this section, "seasonal recreational tax capacity" 
        means the tax capacity of all class 4c(1) property under section 
        273.13, subdivision 25, except that the first $76,000 of market 
        value of each noncommercial class 4c(1) property has a tax 
        capacity for this purpose equal to 40 percent of its tax 
        capacity under section 273.13. 
           Subd. 4.  [APPORTIONMENT AND LEVY OF STATE GENERAL 
        TAX.] The state general tax must be distributed among the 
        counties by applying a uniform rate to each county's 
        commercial-industrial tax capacity and its seasonal recreational 
        tax capacity.  Within each county, the tax must be levied by 
        applying a uniform rate against commercial-industrial tax 
        capacity and seasonal recreational tax capacity.  By November 1 
        each year, the commissioner of revenue shall certify the state 
        general levy rate to each county auditor. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and subsequent years. 
           Sec. 47.  Minnesota Statutes 2000, section 275.065, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
        county auditor shall prepare and the county treasurer shall 
        deliver after November 10 and on or before November 24 each 
        year, by first class mail to each taxpayer at the address listed 
        on the county's current year's assessment roll, a notice of 
        proposed property taxes.  
           (b) The commissioner of revenue shall prescribe the form of 
        the notice. 
           (c) The notice must inform taxpayers that it contains the 
        amount of property taxes each taxing authority proposes to 
        collect for taxes payable the following year.  In the case of a 
        town, or in the case of the state determined portion of the 
        school district levy, the final tax amount will be its proposed 
        tax.  In the case of taxing authorities required to hold a 
        public meeting under subdivision 6, the notice must clearly 
        state that each taxing authority, including regional library 
        districts established under section 134.201, and including the 
        metropolitan taxing districts as defined in paragraph (i), but 
        excluding all other special taxing districts and towns, will 
        hold a public meeting to receive public testimony on the 
        proposed budget and proposed or final property tax levy, or, in 
        case of a school district, on the current budget and proposed 
        property tax levy.  It must clearly state the time and place of 
        each taxing authority's meeting, a telephone number for the 
        taxing authority that taxpayers may call if they have questions 
        related to the notice, and an address where comments will be 
        received by mail.  
           (d) The notice must state for each parcel: 
           (1) the market value of the property as determined under 
        section 273.11, and used for computing property taxes payable in 
        the following year and for taxes payable in the current year as 
        each appears in the records of the county assessor on November 1 
        of the current year; and, in the case of residential property, 
        whether the property is classified as homestead or 
        nonhomestead.  The notice must clearly inform taxpayers of the 
        years to which the market values apply and that the values are 
        final values; 
           (2) the items listed below, shown separately by county, 
        city or town, state determined school tax net of the education 
        homestead credit under section 273.1382, voter approved school 
        levy, other local school levy, and the sum of the special taxing 
        districts, and as a total of all taxing authorities:  
           (i) the actual tax for taxes payable in the current year; 
           (ii) the tax change due to spending factors, defined as the 
        proposed tax minus the constant spending tax amount; 
           (iii) the tax change due to other factors, defined as the 
        constant spending tax amount minus the actual current year tax; 
        and 
           (iv) the proposed tax amount. 
           In the case of a town or the state determined school tax, 
        the final tax shall also be its proposed tax unless the town 
        changes its levy at a special town meeting under section 
        365.52.  If a school district has certified under section 
        126C.17, subdivision 9, that a referendum will be held in the 
        school district at the November general election, the county 
        auditor must note next to the school district's proposed amount 
        that a referendum is pending and that, if approved by the 
        voters, the tax amount may be higher than shown on the notice.  
        In the case of the city of Minneapolis, the levy for the 
        Minneapolis library board and the levy for Minneapolis park and 
        recreation shall be listed separately from the remaining amount 
        of the city's levy.  In the case of a parcel where tax increment 
        or the fiscal disparities areawide tax under chapter 276A or 
        473F applies, the proposed tax levy on the captured value or the 
        proposed tax levy on the tax capacity subject to the areawide 
        tax must each be stated separately and not included in the sum 
        of the special taxing districts; and 
           (3) the increase or decrease between the total taxes 
        payable in the current year and the total proposed taxes, 
        expressed as a percentage. 
           For purposes of this section, the amount of the tax on 
        homesteads qualifying under the senior citizens' property tax 
        deferral program under chapter 290B is the total amount of 
        property tax before subtraction of the deferred property tax 
        amount. 
           (e) The notice must clearly state that the proposed or 
        final taxes do not include the following: 
           (1) special assessments; 
           (2) levies approved by the voters after the date the 
        proposed taxes are certified, including bond referenda, school 
        district levy referenda, and levy limit increase referenda; 
           (3) amounts necessary to pay cleanup or other costs due to 
        a natural disaster occurring after the date the proposed taxes 
        are certified; 
           (4) amounts necessary to pay tort judgments against the 
        taxing authority that become final after the date the proposed 
        taxes are certified; and 
           (5) the contamination tax imposed on properties which 
        received market value reductions for contamination. 
           (f) Except as provided in subdivision 7, failure of the 
        county auditor to prepare or the county treasurer to deliver the 
        notice as required in this section does not invalidate the 
        proposed or final tax levy or the taxes payable pursuant to the 
        tax levy. 
           (g) If the notice the taxpayer receives under this section 
        lists the property as nonhomestead, and satisfactory 
        documentation is provided to the county assessor by the 
        applicable deadline, and the property qualifies for the 
        homestead classification in that assessment year, the assessor 
        shall reclassify the property to homestead for taxes payable in 
        the following year. 
           (h) In the case of class 4 residential property used as a 
        residence for lease or rental periods of 30 days or more, the 
        taxpayer must either: 
           (1) mail or deliver a copy of the notice of proposed 
        property taxes to each tenant, renter, or lessee; or 
           (2) post a copy of the notice in a conspicuous place on the 
        premises of the property.  
           The notice must be mailed or posted by the taxpayer by 
        November 27 or within three days of receipt of the notice, 
        whichever is later.  A taxpayer may notify the county treasurer 
        of the address of the taxpayer, agent, caretaker, or manager of 
        the premises to which the notice must be mailed in order to 
        fulfill the requirements of this paragraph. 
           (i) For purposes of this subdivision, subdivisions 5a and 
        6, "metropolitan special taxing districts" means the following 
        taxing districts in the seven-county metropolitan area that levy 
        a property tax for any of the specified purposes listed below: 
           (1) metropolitan council under section 473.132, 473.167, 
        473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
           (2) metropolitan airports commission under section 473.667, 
        473.671, or 473.672; and 
           (3) metropolitan mosquito control commission under section 
        473.711. 
           For purposes of this section, any levies made by the 
        regional rail authorities in the county of Anoka, Carver, 
        Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
        398A shall be included with the appropriate county's levy and 
        shall be discussed at that county's public hearing. 
           (j) If a statutory or home rule charter city or a town has 
        exercised the local levy option provided by section 473.388, 
        subdivision 7, it may include in the notice of its proposed 
        taxes the amount of its proposed taxes attributable to its 
        exercise of the option.  In the first year of the city or town's 
        exercise of this option, the statement shall include an estimate 
        of the reduction of the metropolitan council's tax on the parcel 
        due to exercise of that option.  The metropolitan council's levy 
        shall be adjusted accordingly. 
           [EFFECTIVE DATE.] This section is effective for notices of 
        proposed property taxes required in 2001 for taxes payable in 
        2002, and thereafter. 
           Sec. 48.  Minnesota Statutes 2000, section 275.065, 
        subdivision 5a, is amended to read: 
           Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
        population of more than 2,500, county, a metropolitan special 
        taxing district as defined in subdivision 3, paragraph (i), a 
        regional library district established under section 134.201, or 
        school district shall advertise in a newspaper a notice of its 
        intent to adopt a budget and property tax levy or, in the case 
        of a school district, to review its current budget and proposed 
        property taxes payable in the following year, at a public 
        hearing, if a public hearing is required under subdivision 6.  
        The notice must be published not less than two business days nor 
        more than six business days before the hearing. 
           The advertisement must be at least one-eighth page in size 
        of a standard-size or a tabloid-size newspaper.  The 
        advertisement must not be placed in the part of the newspaper 
        where legal notices and classified advertisements appear.  The 
        advertisement must be published in an official newspaper of 
        general circulation in the taxing authority.  The newspaper 
        selected must be one of general interest and readership in the 
        community, and not one of limited subject matter.  The 
        advertisement must appear in a newspaper that is published at 
        least once per week.  
           For purposes of this section, the metropolitan special 
        taxing district's advertisement must only be published in the 
        Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
           In addition to other requirements, a county and a city 
        having a population of more than 2,500 must show in the public 
        advertisement required under this subdivision the current local 
        tax rate, the proposed local tax rate if no property tax levy 
        increase is adopted, and the proposed rate if the proposed levy 
        is adopted.  For purposes of this subdivision, "local tax rate" 
        means the city's or county's net tax capacity levy divided by 
        the city's or county's taxable net tax capacity.  
           (b) The advertisement for school districts, metropolitan 
        special taxing districts, and regional library districts must be 
        in the following form, except that the notice for a school 
        district may include references to the current budget in regard 
        to proposed property taxes.  
                                   "NOTICE OF
                            PROPOSED PROPERTY TAXES
                         (School District/Metropolitan
                        Special Taxing District/Regional
                         Library District) of .........
        The governing body of ........ will soon hold budget hearings 
        and vote on the property taxes for (metropolitan special taxing 
        district/regional library district services that will be 
        provided in (year)/school district services that will be 
        provided in (year) and (year)). 
                           NOTICE OF PUBLIC HEARING:
        All concerned citizens are invited to attend a public hearing 
        and express their opinions on the proposed (school 
        district/metropolitan special taxing district/regional library 
        district) budget and property taxes, or in the case of a school 
        district, its current budget and proposed property taxes, 
        payable in the following year.  The hearing will be held on 
        (Month/Day/Year) at (Time) at (Location, Address)." 
           (c) The advertisement for cities and counties must be in 
        the following form. 
                              "NOTICE OF PROPOSED
                        TOTAL BUDGET AND PROPERTY TAXES
        The (city/county) governing body or board of commissioners will 
        hold a public hearing to discuss the budget and to vote on the 
        amount of property taxes to collect for services the 
        (city/county) will provide in (year). 
           
        SPENDING:  The total budget amounts below compare 
        (city's/county's) (year) total actual budget with the amount the 
        (city/county) proposes to spend in (year). 
           
        (Year) Total          Proposed (Year)         Change from 
        Actual Budget         Budget                  (Year)-(Year)
           
        $.......              $.......                ...%
           
        TAXES:  The property tax amounts below compare that portion of 
        the current budget levied in property taxes in (city/county) for 
        (year) with the property taxes the (city/county) proposes to 
        collect in (year). 
           
        (Year) Property       Proposed (Year)          Change from
        Taxes                 Property Taxes           (Year)-(Year)
           
        $.......              $.......                 ...% 
           
        LOCAL TAX RATE COMPARISON:  The current local tax rate, the 
        local tax rate if no tax levy increase is adopted, and the 
        proposed local tax rate if the proposed levy is adopted. 
           
        (Year)                (Year)                       (Year) 
        Tax Rate              Tax Rate if NO               Proposed 
                              Levy Increase                Tax Rate 
        .......               .......                      ....... 
           
                           ATTEND THE PUBLIC HEARING
        All (city/county) residents are invited to attend the public 
        hearing of the (city/county) to express your opinions on the 
        budget and the proposed amount of (year) property taxes.  The 
        hearing will be held on: 
                             (Month/Day/Year/Time)
                               (Location/Address)
        If the discussion of the budget cannot be completed, a time and 
        place for continuing the discussion will be announced at the 
        hearing.  You are also invited to send your written comments to: 
                                 (City/County)
                              (Location/Address)"
           (d) For purposes of this subdivision, the budget amounts 
        listed on the advertisement mean: 
           (1) for cities, the total government fund expenditures, as 
        defined by the state auditor under section 471.6965, less any 
        expenditures for improvements or services that are specially 
        assessed or charged under chapter 429, 430, 435, or the 
        provisions of any other law or charter; and 
           (2) for counties, the total government fund expenditures, 
        as defined by the state auditor under section 375.169, less any 
        expenditures for direct payments to recipients or providers for 
        the human service aids listed below: 
           (i) Minnesota family investment program under chapters 256J 
        and 256K; 
           (ii) medical assistance under sections 256B.041, 
        subdivision 5, and 256B.19, subdivision 1; 
           (iii) general assistance medical care under section 
        256D.03, subdivision 6; 
           (iv) general assistance under section 256D.03, subdivision 
        2; 
           (v) emergency assistance under section 256J.48; 
           (vi) Minnesota supplemental aid under section 256D.36, 
        subdivision 1; 
           (vii) preadmission screening under section 256B.0911, and 
        alternative care grants under section 256B.0913; 
           (viii) general assistance medical care claims processing, 
        medical transportation and related costs under section 256D.03, 
        subdivision 4; 
           (ix) medical transportation and related costs under section 
        256B.0625, subdivisions 17 to 18a; 
           (x) group residential housing under section 256I.05, 
        subdivision 8, transferred from programs in clauses (iv) and 
        (vi); or 
           (xi) any successor programs to those listed in clauses (i) 
        to (x). 
           (e) A city with a population of over 500 but not more than 
        2,500 that is required to hold a public hearing under 
        subdivision 6 must advertise by posted notice as defined in 
        section 645.12, subdivision 1.  The advertisement must be posted 
        at the time provided in paragraph (a).  It must be in the form 
        required in paragraph (b). 
           (f) For purposes of this subdivision, the population of a 
        city is the most recent population as determined by the state 
        demographer under section 4A.02. 
           (g) The commissioner of revenue, subject to the approval of 
        the chairs of the house and senate tax committees, shall 
        prescribe the form and format of the advertisement 
        advertisements required under this subdivision. 
           [EFFECTIVE DATE.] This section is effective for public 
        advertisements required in 2001 for taxes payable in 2002, and 
        thereafter. 
           Sec. 49.  Minnesota Statutes 2000, section 275.065, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
        (a) For purposes of this section, the following terms shall have 
        the meanings given: 
           (1) "Initial hearing" means the first and primary hearing 
        held to discuss the taxing authority's proposed budget and 
        proposed property tax levy for taxes payable in the following 
        year, or, for school districts, the current budget and the 
        proposed property tax levy for taxes payable in the following 
        year. 
           (2) "Continuation hearing" means a hearing held to complete 
        the initial hearing, if the initial hearing is not completed on 
        its scheduled date. 
           (3) "Subsequent hearing" means the hearing held to adopt 
        the taxing authority's final property tax levy, and, in the case 
        of taxing authorities other than school districts, the final 
        budget, for taxes payable in the following year. 
           (b) Between November 29 and December 20, the governing 
        bodies of a city that has a population over 500, county, 
        metropolitan special taxing districts as defined in subdivision 
        3, paragraph (i), and regional library districts shall each hold 
        an initial public hearing to discuss and seek public comment on 
        its final budget and property tax levy for taxes payable in the 
        following year, and the governing body of the school district 
        shall hold an initial public hearing to review its current 
        budget and proposed property tax levy for taxes payable in the 
        following year.  The metropolitan special taxing districts shall 
        be required to hold only a single joint initial public hearing, 
        the location of which will be determined by the affected 
        metropolitan agencies.  A city, county, metropolitan special 
        taxing district as defined in subdivision 3, paragraph (i), 
        regional library district established under section 134.201, or 
        school district is not required to hold a public hearing under 
        this subdivision unless its proposed property tax levy for taxes 
        payable in the following year, as certified under subdivision 1, 
        has increased over its final property tax levy for taxes payable 
        in the current year by a percentage that is greater than 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 
        Analysts of the United States Department of Commerce for the 
        12-month period ending March 31 of the current year. 
           (c) The initial hearing must be held after 5:00 p.m. if 
        scheduled on a day other than Saturday.  No initial hearing may 
        be held on a Sunday.  
           (d) At the initial hearing under this subdivision, the 
        percentage increase in property taxes proposed by the taxing 
        authority, if any, and the specific purposes for which property 
        tax revenues are being increased must be discussed.  During the 
        discussion, the governing body shall hear comments regarding a 
        proposed increase and explain the reasons for the proposed 
        increase.  The public shall be allowed to speak and to ask 
        questions.  At the public hearing, the school district must also 
        provide and discuss information on the distribution of its 
        revenues by revenue source, and the distribution of its spending 
        by program area.  
           (e) If the initial hearing is not completed on its 
        scheduled date, the taxing authority must announce, prior to 
        adjournment of the hearing, the date, time, and place for the 
        continuation of the hearing.  The continuation hearing must be 
        held at least five business days but no more than 14 business 
        days after the initial hearing.  A continuation hearing may not 
        be held later than December 20 except as provided in paragraphs 
        (f) and (g).  A continuation hearing must be held after 5:00 
        p.m. if scheduled on a day other than Saturday.  No continuation 
        hearing may be held on a Sunday. 
           (f) The governing body of a county shall hold its initial 
        hearing on the first Thursday in December each year, and may 
        hold additional initial hearings on other dates before December 
        20 if necessary for the convenience of county residents.  If the 
        county needs a continuation of its hearing, the continuation 
        hearing shall be held on the third Tuesday in December.  If the 
        third Tuesday in December falls on December 21, the county's 
        continuation hearing shall be held on Monday, December 20.  
           (g) The metropolitan special taxing districts shall hold a 
        joint initial public hearing on the first Wednesday of 
        December.  A continuation hearing, if necessary, shall be held 
        on the second Wednesday of December even if that second 
        Wednesday is after December 10. 
           (h) The county auditor shall provide for the coordination 
        of initial and continuation hearing dates for all school 
        districts and cities within the county to prevent conflicts 
        under clauses (i) and (j). 
           (i) By August 10, each school board and the board of the 
        regional library district shall certify to the county auditors 
        of the counties in which the school district or regional library 
        district is located the dates on which it elects to hold its 
        initial hearing and any continuation hearing.  If a school board 
        or regional library district does not certify these dates by 
        August 10, the auditor will assign the initial and continuation 
        hearing dates.  The dates elected or assigned must not conflict 
        with the initial and continuation hearing dates of the county or 
        the metropolitan special taxing districts.  
           (j) By August 20, the county auditor shall notify the 
        clerks of the cities within the county of the dates on which 
        school districts and regional library districts have elected to 
        hold their initial and continuation hearings.  At the time a 
        city certifies its proposed levy under subdivision 1 it shall 
        certify the dates on which it elects to hold its initial hearing 
        and any continuation hearing.  Until September 15, the first and 
        second Mondays of December are reserved for the use of the 
        cities.  If a city does not certify its hearing dates by 
        September 15, the auditor shall assign the initial and 
        continuation hearing dates.  The dates elected or assigned for 
        the initial hearing must not conflict with the initial hearing 
        dates of the county, metropolitan special taxing districts, 
        regional library districts, or school districts within which the 
        city is located.  To the extent possible, the dates of the 
        city's continuation hearing should not conflict with the 
        continuation hearing dates of the county, metropolitan special 
        taxing districts, regional library districts, or school 
        districts within which the city is located.  This paragraph does 
        not apply to cities of 500 population or less. 
           (k) The county initial hearing date and the city, 
        metropolitan special taxing district, regional library district, 
        and school district initial hearing dates must be designated on 
        the notices required under subdivision 3.  The continuation 
        hearing dates need not be stated on the notices.  
           (l) At a subsequent hearing, each county, school district, 
        city over 500 population, and metropolitan special taxing 
        district may amend its proposed property tax levy and must adopt 
        a final property tax levy.  Each county, city over 500 
        population, and metropolitan special taxing district may also 
        amend its proposed budget and must adopt a final budget at the 
        subsequent hearing.  The final property tax levy must be adopted 
        prior to adopting the final budget.  A school district is not 
        required to adopt its final budget at the subsequent hearing.  
        The subsequent hearing of a taxing authority must be held on a 
        date subsequent to the date of the taxing authority's initial 
        public hearing.  If a continuation hearing is held, the 
        subsequent hearing must be held either immediately following the 
        continuation hearing or on a date subsequent to the continuation 
        hearing.  The subsequent hearing may be held at a regularly 
        scheduled board or council meeting or at a special meeting 
        scheduled for the purposes of the subsequent hearing.  The 
        subsequent hearing of a taxing authority does not have to be 
        coordinated by the county auditor to prevent a conflict with an 
        initial hearing, a continuation hearing, or a subsequent hearing 
        of any other taxing authority.  All subsequent hearings must be 
        held prior to five working days after December 20 of the levy 
        year.  The date, time, and place of the subsequent hearing must 
        be announced at the initial public hearing or at the 
        continuation hearing. 
           (m) The property tax levy certified under section 275.07 by 
        a city of any population, county, metropolitan special taxing 
        district, regional library district, or school district must not 
        exceed the proposed levy determined under subdivision 1, except 
        by an amount up to the sum of the following amounts: 
           (1) the amount of a school district levy whose voters 
        approved a referendum to increase taxes under section 123B.63, 
        subdivision 3, or 126C.17, subdivision 9, after the proposed 
        levy was certified; 
           (2) the amount of a city or county levy approved by the 
        voters after the proposed levy was certified; 
           (3) the amount of a levy to pay principal and interest on 
        bonds approved by the voters under section 475.58 after the 
        proposed levy was certified; 
           (4) the amount of a levy to pay costs due to a natural 
        disaster occurring after the proposed levy was certified, if 
        that amount is approved by the commissioner of revenue under 
        subdivision 6a; 
           (5) the amount of a levy to pay tort judgments against a 
        taxing authority that become final after the proposed levy was 
        certified, if the amount is approved by the commissioner of 
        revenue under subdivision 6a; 
           (6) the amount of an increase in levy limits certified to 
        the taxing authority by the commissioner of children, families, 
        and learning or the commissioner of revenue after the proposed 
        levy was certified; and 
           (7) the amount required under section 126C.55. 
           (n) This subdivision does not apply to towns and special 
        taxing districts other than regional library districts and 
        metropolitan special taxing districts. 
           (o) Notwithstanding the requirements of this section, the 
        employer is required to meet and negotiate over employee 
        compensation as provided for in chapter 179A.  
           [EFFECTIVE DATE.] This section is effective for hearings 
        required in 2001 for taxes payable in 2002 and thereafter. 
           Sec. 50.  Minnesota Statutes 2000, 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; 
           (21) Middle Mississippi river watershed management 
        organization under sections 103B.211 and 103B.241; and 
           (22) emergency medical services special taxing districts 
        under section 144F.01; 
           (23) a county levying under the authority of section 
        103B.241, 103B.245, or 103B.251; and 
           (24) 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.] Clause (22) of this section is effective 
        for taxes levied in 2002, payable in 2003, through taxes levied 
        in 2007, payable in 2008.  Clause (23) of this section is 
        effective for taxes levied in 2001, payable in 2002, and 
        thereafter. 
           Sec. 51.  Minnesota Statutes 2000, section 275.07, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CERTIFICATION OF LEVY.] (a) Except as 
        provided under paragraph (b), the taxes voted by cities, 
        counties, school districts, and special districts shall be 
        certified by the proper authorities to the county auditor on or 
        before five working days after December 20 in each year.  A town 
        must certify the levy adopted by the town board to the county 
        auditor by September 15 each year.  If the town board modifies 
        the levy at a special town meeting after September 15, the town 
        board must recertify its levy to the county auditor on or before 
        five working days after December 20.  The taxes certified shall 
        not be reduced by the county auditor by the aid received under 
        section 273.1398, subdivision 2, but shall be reduced by the 
        county auditor by the aid received under section 273.1398, 
        subdivision 3.  If a city, town, county, school district, or 
        special district fails to certify its levy by that date, its 
        levy shall be the amount levied by it for the preceding year. 
           (b)(i) The taxes voted by counties under sections 103B.241, 
        103B.245, and 103B.251 shall be separately certified by the 
        county to the county auditor on or before five working days 
        after December 20 in each year.  The taxes certified shall not 
        be reduced by the county auditor by the aid received under 
        section 273.1398, subdivisions 2 and 3.  If a county fails to 
        certify its levy by that date, its levy shall be the amount 
        levied by it for the preceding year.  
           (ii) For purposes of the proposed property tax notice under 
        section 275.065 and the property tax statement under section 
        276.04, for the first year in which the county implements the 
        provisions of this paragraph, the county auditor shall reduce 
        the county's levy for the preceding year to reflect any amount 
        levied for water management purposes under clause (i) included 
        in the county's levy. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2001, payable in 2002, and thereafter. 
           Sec. 52.  Minnesota Statutes 2000, section 275.28, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUDITOR TO MAKE.] The county auditor shall 
        make out the tax lists according to the prescribed form, and to 
        correspond with the assessment districts.  The rate percent 
        necessary to raise the required amount of the various taxes 
        shall be calculated on the net tax capacity of property as 
        determined by the state board of equalization, but, in 
        calculating such rates, no rate shall be used resulting in a 
        fraction other than a decimal fraction, or less than a gross 
        local tax rate of .01 percent or a net local tax rate of .01 
        percent; and, in extending any tax, whenever it amounts to the 
        fractional part of a cent, it shall be made one cent.  The tax 
        lists shall also be made out to correspond with the assessment 
        books in reference to ownership and description of property, 
        with columns for the valuation and for the various items of tax 
        included in the total amount of all taxes set down opposite each 
        description.  The auditor shall enter both the state tax 
        determined under sections 275.02 and 275.025, and the local 
        taxes determined under sections 275.08 and 275.083, on the tax 
        lists.  The total ad valorem property tax for each description 
        of property before credits is the sum of the amounts of the 
        various local taxes that apply to the parcel plus the amount of 
        any applicable state tax.  Opposite each description which has 
        been sold for taxes, and which is subject to redemption, but not 
        redeemed, shall be placed the words "sold for taxes."  The 
        amount of all special taxes shall be entered in the proper 
        columns, but the general taxes may be shown by entering the rate 
        percent of each tax at the head of the proper columns, without 
        extending the same, in which case a schedule of the rates 
        percent of such taxes shall be made on the first page of each 
        tax list.  If the auditor fails to enter on any such list before 
        its delivery to the treasurer any tax levied, the tax may be 
        subsequently entered.  The tax lists shall be deemed completed, 
        and all taxes extended thereon, as of January 1 annually.  
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 53.  Minnesota Statutes 2000, section 275.61, is 
        amended to read: 
           275.61 [VOTER APPROVED LEVY; MARKET VALUE.] 
           Subdivision 1.  [MARKET VALUE.] For local governmental 
        subdivisions other than school districts, any levy, including 
        the issuance of debt obligations payable in whole or in part 
        from property taxes, required to be approved and approved by the 
        voters at a general or special election for taxes payable in 
        1993 and thereafter, shall be levied against the referendum 
        market value of all taxable property within the governmental 
        subdivision, as defined in section 126C.01, subdivision 3.  Any 
        levy amount subject to the requirements of this section shall be 
        certified separately to the county auditor under section 275.07. 
           The ballot shall state the maximum amount of the increased 
        levy as a percentage of market value and the amount that will be 
        raised by the new referendum tax rate in the first year it is to 
        be levied. 
           Subd. 2.  [CONVERSION TO NET TAX CAPACITY.] Any referendum 
        levy approved under subdivision 1 prior to January 1, 2001, may 
        be converted from a referendum market value basis to a net tax 
        capacity basis, provided that the proportion of the 
        jurisdiction's referendum market value exempted under article 2, 
        section 8, is at least ten percent for property taxes payable in 
        2001.  A jurisdiction choosing to exercise the option to convert 
        the referendum tax to a net tax capacity basis must notify the 
        county auditor of its intent prior to October 1, 2001.  A 
        decision to convert a referendum levy under this subdivision 
        shall be a permanent change affecting all future years.  The 
        option to convert a levy under this subdivision shall cease 
        after October 1, 2001. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 54.  Minnesota Statutes 2000, section 275.62, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REPORT ON TAXES LEVIED.] The commissioner 
        of revenue shall establish procedures for the annual reporting 
        of local government levies.  Each local governmental unit shall 
        submit a report to the commissioner by December 30 of the year 
        in which the tax is levied.  The report shall include, but is 
        not limited to, information on the amount of the tax levied by 
        the governmental unit for the following purposes: 
           (1) debt, which includes taxes levied for the purposes 
        defined in Minnesota Statutes 1991 Supplement, section 275.50, 
        subdivision 5, clauses (b), (c), (d), and (e); 
           (2) social services and related programs, which include 
        taxes levied for the purposes defined in Minnesota Statutes 1991 
        Supplement, section 275.50, subdivision 5, clauses (a), (j), and 
        (v); 
           (3) libraries, which include taxes levied for the purposes 
        defined in Minnesota Statutes 1991 Supplement, section 275.50, 
        subdivision 5, clause (n); 
           (4) for counties only, the amount of levy needed to fund 
        increased county costs associated with the welfare reform under 
        Laws 1997, chapter 85, including increased administration and 
        program costs of the income maintenance programs and also 
        related support services as they relate directly to the welfare 
        reform (2) the amounts levied for each of the purposes listed in 
        section 275.70, subdivision 5; and 
           (5) (3) other levies, which include the taxes levied for 
        all purposes not included in clause (1), (2), or (3), or (4). 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 55.  Minnesota Statutes 2000, section 276.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
        shall provide for the printing of the tax statements.  The 
        commissioner of revenue shall prescribe the form of the property 
        tax statement and its contents.  The statement must contain a 
        tabulated statement of the dollar amount due to each taxing 
        authority and the amount of the state determined school tax from 
        the parcel of real property for which a particular tax statement 
        is prepared.  The dollar amounts attributable to the county, the 
        state determined school tax, the voter approved school tax, the 
        other local school tax, the township or municipality, and the 
        total of the metropolitan special taxing districts as defined in 
        section 275.065, subdivision 3, paragraph (i), must be 
        separately stated.  The amounts due all other special taxing 
        districts, if any, may be aggregated.  The amount of the tax on 
        homesteads qualifying under the senior citizens' property tax 
        deferral program under chapter 290B is the total amount of 
        property tax before subtraction of the deferred property tax 
        amount.  The amount of the tax on contamination value imposed 
        under sections 270.91 to 270.98, if any, must also be separately 
        stated.  The dollar amounts, including the dollar amount of any 
        special assessments, may be rounded to the nearest even whole 
        dollar.  For purposes of this section whole odd-numbered dollars 
        may be adjusted to the next higher even-numbered dollar.  The 
        amount of market value excluded under section 273.11, 
        subdivision 16, if any, must also be listed on the tax 
        statement.  The statement shall include the following sentences, 
        printed in upper case letters in boldface print:  "EVEN THOUGH 
        THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX 
        REVENUES, IT SETS THE AMOUNT OF THE STATE-DETERMINED SCHOOL TAX 
        LEVY.  THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY 
        PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT." 
           (b) The property tax statements for manufactured homes and 
        sectional structures taxed as personal property shall contain 
        the same information that is required on the tax statements for 
        real property.  
           (c) Real and personal property tax statements must contain 
        the following information in the order given in this paragraph.  
        The information must contain the current year tax information in 
        the right column with the corresponding information for the 
        previous year in a column on the left: 
           (1) the property's estimated market value under section 
        273.11, subdivision 1; 
           (2) the property's taxable market value after reductions 
        under section 273.11, subdivisions 1a and 16; 
           (3) the property's gross tax, calculated by adding the 
        property's total property tax to the sum of the aids enumerated 
        in clause (4); 
           (4) a total of the following aids: 
           (i) education aids payable under chapters 122A, 123A, 123B, 
        124D, 125A, 126C, and 127A; 
           (ii) local government aids for cities, towns, and counties 
        under chapter 477A; 
           (iii) disparity reduction aid under section 273.1398; and 
           (iv) homestead and agricultural credit aid under section 
        273.1398; 
           (5) for homestead residential and agricultural properties, 
        the education homestead credit credits under section 273.1382 
        273.1384; 
           (6) any credits received under sections 273.119; 273.123; 
        273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
        473H.10, except that the amount of credit received under section 
        273.135 must be separately stated and identified as "taconite 
        tax relief"; and 
           (7) the net tax payable in the manner required in paragraph 
        (a). 
           (d) If the county uses envelopes for mailing property tax 
        statements and if the county agrees, a taxing district may 
        include a notice with the property tax statement notifying 
        taxpayers when the taxing district will begin its budget 
        deliberations for the current year, and encouraging taxpayers to 
        attend the hearings.  If the county allows notices to be 
        included in the envelope containing the property tax statement, 
        and if more than one taxing district relative to a given 
        property decides to include a notice with the tax statement, the 
        county treasurer or auditor must coordinate the process and may 
        combine the information on a single announcement.  
           The commissioner of revenue shall certify to the county 
        auditor the actual or estimated aids enumerated in clause (4) 
        that local governments will receive in the following year.  The 
        commissioner must certify this amount by January 1 of each year. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001 
        and thereafter, for statements required in 2002 and thereafter. 
           Sec. 56.  Minnesota Statutes 2000, section 276.11, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERALLY.] As soon as practical after the 
        settlement day determined in section 276.09, the county 
        treasurer shall pay to the state treasurer or the treasurer of a 
        town, city, school district, or special district, on the warrant 
        of the county auditor, all receipts of taxes levied by the 
        taxing district and deliver up all orders and other evidences of 
        indebtedness of the taxing district, taking triplicate receipts 
        for them.  The treasurer shall file one of the receipts with the 
        county auditor, and shall return one by mail on the day of its 
        receipt to the clerk of the town, city, school district, or 
        special district to which payment was made.  The clerk shall 
        keep the receipt in the clerk's office.  Upon written request of 
        the taxing district, to the extent practicable, the county 
        treasurer shall make partial payments of amounts collected 
        periodically in advance of the next settlement and 
        distribution.  A statement prepared by the county treasurer must 
        accompany each payment.  It must state the years for which taxes 
        included in the payment were collected and, for each year, the 
        amount of the taxes and any penalties on the tax.  Upon written 
        request of a taxing district, except school districts, the 
        county treasurer shall pay at least 70 percent of the estimated 
        collection within 30 days after the settlement date determined 
        in section 276.09.  Within seven business days after the due 
        date, or 28 calendar days after the postmark date on the 
        envelopes containing real or personal property tax statements, 
        whichever is latest, the county treasurer shall pay to the 
        treasurer of the school districts 50 percent of the estimated 
        collections arising from taxes levied by and belonging to the 
        school district, unless the school district elects to receive 50 
        percent of the estimated collections arising from taxes levied 
        by and belonging to the school district after making a 
        proportionate reduction to reflect any loss in collections as 
        the result of any delay in mailing tax statements.  In that 
        case, 50 percent of those adjusted, estimated collections shall 
        be paid by the county treasurer to the treasurer of the school 
        district within seven business days of the due date.  The 
        remaining 50 percent of the estimated collections must be paid 
        to the treasurer of the school district within the next seven 
        business days of the later of the dates in the preceding 
        sentence, unless the school district elects to receive the 
        remainder of its estimated collections after a proportionate 
        reduction has been made to reflect any loss in collections as 
        the result of any delay in mailing tax statements.  In that 
        case, the remaining 50 percent of those adjusted, estimated 
        collections shall be paid by the county treasurer to the 
        treasurer of the school district within 14 days of the due 
        date.  The treasurer shall pay the balance of the amounts 
        collected to the state before June 30, or to a municipal 
        corporation or other body within 60 days after the settlement 
        date determined in section 276.09.  After 45 days interest at an 
        annual rate of eight percent accrues and must be paid to the 
        taxing district.  Interest must be paid upon appropriation from 
        the general revenue fund of the county.  If not paid, it may be 
        recovered by the taxing district, in a civil action. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and subsequent years. 
           Sec. 57.  Minnesota Statutes 2000, section 276A.06, 
        subdivision 3, is amended to read: 
           Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
        apportion the levy of each governmental unit in the county in 
        the manner prescribed by this subdivision.  The auditor shall: 
           (a) by August 20 of 1997 and each subsequent year, 
        determine the areawide portion of the levy for each governmental 
        unit by multiplying the local tax rate of the governmental unit 
        for the preceding levy year times the distribution value set 
        forth in subdivision 2, clause (b); and 
           (b) by September 5 of 1997 and each subsequent year, 
        determine the local portion of the current year's levy by 
        subtracting the resulting amount from clause (a) from the 
        governmental unit's current year's levy; and 
           (c) for determinations made under paragraph (a) in the case 
        of school districts, for taxes payable in 2002, exclude the 
        general education tax rate and the portion of the referendum tax 
        rate attributable to the first $415 per pupil unit from the 
        local tax rate for the preceding levy year. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 58.  Minnesota Statutes 2000, section 281.17, is 
        amended to read: 
           281.17 [PERIOD FOR REDEMPTION.] 
           Except for properties for which the period of redemption 
        has been limited under sections 281.173 and 281.174, the 
        following periods for redemption apply. 
           The period of redemption for all lands sold to the state at 
        a tax judgment sale shall be three years from the date of sale 
        to the state of Minnesota if the land is within an incorporated 
        area unless it is:  (a) nonagricultural homesteaded land as 
        defined in section 273.13, subdivision 22; (b) homesteaded 
        agricultural land as defined in section 273.13, subdivision 23, 
        paragraph (a); or (c) seasonal recreational land as defined in 
        section 273.13, subdivision 22, paragraph (c), or 25, paragraph 
        (c) (d), clause (5) (1), for which the period of redemption is 
        five years from the date of sale to the state of Minnesota. 
           The period of redemption for homesteaded lands as defined 
        in section 273.13, subdivision 22, located in a targeted 
        neighborhood as defined in Laws 1987, chapter 386, article 6, 
        section 4, and sold to the state at a tax judgment sale is three 
        years from the date of sale.  The period of redemption for all 
        lands located in a targeted neighborhood as defined in Laws 
        1987, chapter 386, article 6, section 4, except (1) homesteaded 
        lands as defined in section 273.13, subdivision 22, and (2) for 
        periods of redemption beginning after June 30, 1991, but before 
        July 1, 1996, lands located in the Loring Park targeted 
        neighborhood on which a notice of lis pendens has been served, 
        and sold to the state at a tax judgment sale is one year from 
        the date of sale. 
           The period of redemption for all real property constituting 
        a mixed municipal solid waste disposal facility that is a 
        qualified facility under section 115B.39, subdivision 1, is one 
        year from the date of the sale to the state of Minnesota. 
           The period of redemption for all other lands sold to the 
        state at a tax judgment sale shall be five years from the date 
        of sale, except that the period of redemption for nonhomesteaded 
        agricultural land as defined in section 273.13, subdivision 23, 
        paragraph (b), shall be two years from the date of sale if at 
        that time that property is owned by a person who owns one or 
        more parcels of property on which taxes are delinquent, and the 
        delinquent taxes are more than 25 percent of the prior year's 
        school district levy. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 59.  Minnesota Statutes 2000, section 282.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CLASSIFICATION AS CONSERVATION OR 
        NONCONSERVATION.] It is the general policy of this state to 
        encourage the best use of tax-forfeited lands, recognizing that 
        some lands in public ownership should be retained and managed 
        for public benefits while other lands should be returned to 
        private ownership.  Parcels of land becoming the property of the 
        state in trust under law declaring the forfeiture of lands to 
        the state for taxes must be classified by the county board of 
        the county in which the parcels lie as conservation or 
        nonconservation.  In making the classification the board shall 
        consider the present use of adjacent lands, the productivity of 
        the soil, the character of forest or other growth, accessibility 
        of lands to established roads, schools, and other public 
        services, their peculiar suitability or desirability for 
        particular uses and the suitability of the forest resources on 
        the land for multiple use, sustained yield management.  The 
        classification, furthermore, must encourage and foster a mode of 
        land utilization that will facilitate the economical and 
        adequate provision of transportation, roads, water supply, 
        drainage, sanitation, education, and recreation; facilitate 
        reduction of governmental expenditures; conserve and develop the 
        natural resources; and foster and develop agriculture and other 
        industries in the districts and places best suited to them. 
           In making the classification the county board may use 
        information made available by any office or department of the 
        federal, state, or local governments, or by any other person or 
        agency possessing pertinent information at the time the 
        classification is made.  The lands may be reclassified from time 
        to time as the county board considers necessary or desirable, 
        except for conservation lands held by the state free from any 
        trust in favor of any taxing district.  
           If the lands are located within the boundaries of an 
        organized town, with taxable valuation in excess of $20,000, or 
        incorporated municipality, the classification or 
        reclassification and sale must first be approved by the town 
        board of the town or the governing body of the municipality in 
        which the lands are located.  The town board of the town or the 
        governing body of the municipality is considered to have 
        approved the classification or reclassification and sale if the 
        county board is not notified of the disapproval of the 
        classification or reclassification and sale within 60 days of 
        the date the request for approval was transmitted to the town 
        board of the town or governing body of the municipality.  If the 
        town board or governing body desires to acquire any parcel lying 
        in the town or municipality by procedures authorized in this 
        section, it must file a written application with the county 
        board to withhold the parcel from public sale.  The application 
        must be filed within 60 days of the request for classification 
        or reclassification and sale.  The county board shall then 
        withhold the parcel from public sale for six months.  A 
        municipality or governmental subdivision shall pay maintenance 
        costs incurred by the county during the six-month period while 
        the property is withheld from public sale, provided the property 
        is not offered for public sale after the six-month period.  A 
        clerical error made by county officials does not serve to 
        eliminate the request of the town board or governing body if the 
        board or governing body has forwarded the application to the 
        county auditor.  If the town board or governing body of the 
        municipality fails to submit an application and a resolution of 
        the board or governing body to acquire the property within the 
        withholding period, the county may offer the property for sale 
        upon the expiration of the withholding period. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 60.  Minnesota Statutes 2000, section 282.01, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 
        Notwithstanding subdivision 1a, in the case of tax-forfeited 
        lands located in a targeted neighborhood, as defined in section 
        469.201, subdivision 10, outside the metropolitan area, as 
        defined in and section 473.121, subdivision 2, the commissioner 
        of revenue may shall convey by deed in the name of the state any 
        tract of tax-forfeited land held in trust in favor of the taxing 
        districts, to a political subdivision that submits an 
        application to the commissioner of revenue and the 
        recommendation of the county board. 
           (b) Notwithstanding subdivision 1a, in the case of 
        tax-forfeited lands located in a targeted neighborhood, as 
        defined in section 469.201, subdivision 10, in a county in the 
        metropolitan area, as defined in section 473.121, subdivision 2, 
        the commissioner of revenue shall convey by deed in the name of 
        the state any tract of tax-forfeited land held in trust in favor 
        of the taxing districts, to a political subdivision that submits 
        an application to the commissioner of revenue and the county 
        board. 
           (c) The application under paragraph (a) or (b) must include 
        a statement of facts as to the use to be made of the tract, the 
        need therefor, and a resolution, adopted by the governing body 
        of the political subdivision, finding that the conveyance of a 
        tract of tax-forfeited land to the political subdivision is 
        necessary to provide for the redevelopment of land as productive 
        taxable property.  Deeds of conveyance issued under paragraph 
        (a) are not conditioned on continued use of the property for the 
        use stated in the application.  
           [EFFECTIVE DATE.] This section is effective for deeds 
        issued on or after August 1, 2001. 
           Sec. 61.  Minnesota Statutes 2000, section 282.01, 
        subdivision 1c, is amended to read: 
           Subd. 1c.  [DEED OF CONVEYANCE; FORM; APPROVALS.] The deed 
        of conveyance for property conveyed for a public use must be on 
        a form approved by the attorney general and must be conditioned 
        on continued use for the purpose stated in the application.  If, 
        however, the governing body of the governmental subdivision by 
        resolution determines that some other public use should be made 
        of the lands, and the change of use is approved by the county 
        board and an application for change of use is made to, and 
        approved by, the commissioner, the changed use may be made 
        without conveying the lands back to the state and securing a new 
        conveyance for the new public use. 
           [EFFECTIVE DATE.] This section is effective for deeds 
        issued on or after August 1, 2001.  
           Sec. 62.  Minnesota Statutes 2000, section 282.01, 
        subdivision 1d, is amended to read: 
           Subd. 1d.  [REVERTER FOR FAILURE TO USE; CONVEYANCE TO 
        STATE.] When If after three years from the date of the 
        conveyance a governmental subdivision to which tax-forfeited 
        land has been conveyed for a specified public use as provided in 
        this section fails to put the land to that use, or to some other 
        authorized public use as provided in this section, or abandons 
        that use, the governing body of the subdivision shall may, with 
        the approval of the county board, purchase the property for an 
        authorized public purpose at the present appraised value as 
        determined by the county board.  In that case, the commissioner 
        of revenue shall, upon proper written application approved by 
        the county board, issue an appropriate deed to the subdivisions 
        free of a use restriction and reverter.  The governing body may 
        also authorize the proper officers to convey the land, or the 
        part of the land not required for an authorized public use, to 
        the state of Minnesota.  The officers shall execute a deed of 
        conveyance immediately.  The conveyance is subject to the 
        approval of the commissioner and its form must be approved by 
        the attorney general.  A sale, lease, transfer, or other 
        conveyance of tax-forfeited lands by a housing and redevelopment 
        authority, a port authority, an economic development authority, 
        or a city as authorized by chapter 469 is not an abandonment of 
        use and the lands shall not be reconveyed to the state nor shall 
        they revert to the state.  A certificate made by a housing and 
        redevelopment authority, a port authority, an economic 
        development authority, or a city referring to a conveyance by it 
        and stating that the conveyance has been made as authorized by 
        chapter 469 may be filed with the county recorder or registrar 
        of titles, and the rights of reverter in favor of the state 
        provided by subdivision 1e will then terminate.  No vote of the 
        people is required for the conveyance. 
           [EFFECTIVE DATE.] This section is effective August 1, 2001. 
        For deeds existing on the effective date, the three-year 
        limitation begins on August 1, 2001, except no deed issued prior 
        to August 1, 2001, shall have a limitation of less than five 
        years. 
           Sec. 63.  Minnesota Statutes 2000, section 282.01, 
        subdivision 1e, is amended to read: 
           Subd. 1e.  [NOTICE AND DECLARATION OF REVERSION.] If the 
        tax-forfeited land is not either purchased or conveyed to the 
        state in accordance with subdivision 1d, the commissioner of 
        revenue shall by written instrument, in form approved by the 
        attorney general, declare the land to have reverted to the 
        state, and shall serve a notice of reversion, with a copy of the 
        declaration, by certified mail upon the clerk or recorder of the 
        governmental subdivision concerned.  No declaration of reversion 
        under this subdivision shall be made earlier than five years 
        from the date of conveyance for failure to put land to the use 
        specified or from the date of abandonment of that use if the 
        lands have been put to that use 60 days after the expiration of 
        the three-year period described in subdivision 1d.  The 
        commissioner shall file the original declaration in the 
        commissioner's office, with verified proof of service.  The 
        governmental subdivision may appeal to the district court of the 
        county in which the land lies by filing with the court 
        administrator a notice of appeal, specifying the grounds of 
        appeal and the description of the land involved, mailing a copy 
        of the notice of appeal by certified mail to the commissioner of 
        revenue, and filing a copy for record with the county recorder 
        or registrar of titles, all within 30 days after the mailing of 
        the notice of reversion.  The appeal shall be tried by the court 
        in like manner as a civil action.  If no appeal is taken as 
        provided in this subdivision, the declaration of reversion is 
        final.  The commissioner of revenue shall file for record with 
        the county recorder or registrar of titles, of the county within 
        which the land lies, a certified copy of the declaration of 
        reversion and proof of service. 
           [EFFECTIVE DATE.] This section is effective for deeds 
        issued on or after August 1, 2001. 
           Sec. 64.  Minnesota Statutes 2000, section 282.241, is 
        amended to read: 
           282.241 [REPURCHASE AFTER FORFEITURE.] 
           Subdivision 1.  [REPURCHASE REQUIREMENTS.] The owner at the 
        time of forfeiture, or the owner's heirs, devisees, or 
        representatives, or any person to whom the right to pay taxes 
        was given by statute, mortgage, or other agreement, may 
        repurchase any parcel of land claimed by the state to be 
        forfeited to the state for taxes unless before the time 
        repurchase is made the parcel is sold under installment 
        payments, or otherwise, by the state as provided by law, or is 
        under mineral prospecting permit or lease, or proceedings have 
        been commenced by the state or any of its political subdivisions 
        or by the United States to condemn the parcel of land.  The 
        parcel of land may be repurchased for the sum of all delinquent 
        taxes and assessments computed under section 282.251, together 
        with penalties, interest, and costs, that accrued or would have 
        accrued if the parcel of land had not forfeited to the state.  
        Except for property which was homesteaded on the date of 
        forfeiture, repurchase is permitted during one year only from 
        the date of forfeiture, and in any case only after the adoption 
        of a resolution by the board of county commissioners determining 
        that by repurchase undue hardship or injustice resulting from 
        the forfeiture will be corrected, or that permitting the 
        repurchase will promote the use of the lands that will best 
        serve the public interest.  If the county board has good cause 
        to believe that a repurchase installment payment plan for a 
        particular parcel is unnecessary and not in the public interest, 
        the county board may require as a condition of repurchase that 
        the entire repurchase price be paid at the time of repurchase.  
        A repurchase is subject to any easement, lease, or other 
        encumbrance granted by the state before the repurchase, and if 
        the land is located within a restricted area established by any 
        county under Laws 1939, chapter 340, the repurchase must not be 
        permitted unless the resolution approving the repurchase is 
        adopted by the unanimous vote of the board of county 
        commissioners. 
           The person seeking to repurchase under this section shall 
        pay all maintenance costs incurred by the county auditor during 
        the time the property was tax-forfeited.  
           Subd. 2.  [ALTERNATIVE COMPUTATION OF REPURCHASE AMOUNT.] A 
        county board may by resolution establish an alternative method 
        of computing the repurchase amount under this subdivision for 
        property homesteaded at the time of forfeiture that has been in 
        forfeited status for more than ten years.  Equivalent taxes, 
        penalties, interest, and costs for each year the property was in 
        forfeiture status must be computed using the simple average of 
        the assessor's estimated market value at forfeiture and the 
        assessor's current estimated market value multiplied by the 
        class rates under current law and applying the current tax, 
        penalty, and interest rates.  Those amounts, plus any unpaid 
        special assessments reinstated and included in the purchase 
        price under section 282.251, including the penalties and 
        interest that accrued or would have accrued on the special 
        assessments, computed under current rates, are the repurchase 
        price.  The county assessor shall determine the current market 
        value and classification of the property. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 65.  Minnesota Statutes 2000, section 297B.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL FUND SHARE.] Money collected and 
        received under this chapter must be deposited as provided in 
        this subdivision.  
           Thirty-two percent of the money collected and received must 
        be deposited in the highway user tax distribution fund, and 20.5 
        percent must be deposited in the metropolitan area transit fund 
        under section 16A.88, and 1.25 percent must be deposited in the 
        greater Minnesota transit fund under section 16A.88.  In fiscal 
        year 2004 and thereafter, two percent of the money collected and 
        received must be deposited in the metropolitan area transit 
        appropriation account under section 16A.88.  The remaining 68 
        percent of the money must be deposited in the general fund.  
           [EFFECTIVE DATE.] This section is effective July 1, 2002. 
           Sec. 66.  [383A.76] [TAX-FORFEITED LANDS.] 
           Subdivision 1.  [SALE; VALUATION.] The Ramsey county board 
        may sell tax-forfeited lands in the county to an organized or 
        incorporated governmental subdivision of the state for any 
        public purpose for which the subdivision is authorized to 
        acquire property.  In the case of tax-forfeited land in the 
        county which a governmental subdivision has requested for 
        housing purposes, the county board may sell that property to the 
        requesting subdivision for the specified housing use at a value, 
        which may be less than its appraised value, as determined by the 
        county board.  Factors that may be considered by the county 
        board in determining value for lands to be held for a permitted 
        public purpose or redeveloped under chapter 469 include the 
        projected gap financing and public subsidy needed for a 
        redevelopment project, expected increases in property taxes, 
        before and after redevelopment appraised values, the potential 
        use of the property for affordable housing, environmental 
        contamination and pollution, site preparation and infrastructure 
        costs, and any other relevant factors.  The commissioner of 
        revenue shall convey by deed in the name of the state a tract of 
        tax-forfeited land held in trust in favor of the taxing 
        districts to a governmental subdivision for an authorized public 
        use, if an application is submitted to the commissioner.  The 
        application must include a statement of facts as to the use to 
        be made of the tract, the need for it, and the recommendation of 
        the county board.  Property conveyed under this section for a 
        value that is less than its appraised value cannot be included 
        in a tax increment financing district.  To the extent the 
        provisions of chapter 282 are not inconsistent with this 
        section, the provisions of chapter 282 apply to the sale of tax 
        forfeited land in Ramsey county. 
           Subd. 2.  [USE OF LAND.] For lands located within Ramsey 
        county, the deed of conveyance of tax-forfeited land to an 
        organized or incorporated governmental subdivision of the state 
        for an authorized use must be on a form approved by the attorney 
        general and must be conditioned on continued use for the purpose 
        stated in the application.  If the governing body of the 
        governmental subdivision determines by resolution after public 
        hearing that some other public use should be made of the lands, 
        the changed use may be made upon filing with the county recorder 
        or registrar of titles a certified copy of the resolution and 
        without conveying the lands back to the state and securing a new 
        conveyance for the new public use.  Permitted public uses under 
        this section include street, storm water ponding, drainage, 
        parks, watershed, wetlands, library, fire and police stations, 
        utility easements, and public facilities.  
           Subd. 3.  [REVERTER OF LAND.] When a subdivision to which 
        tax-forfeited land has been conveyed for a housing purpose at a 
        value of less than the appraised value, fails to pass a 
        resolution designating a developer or approving a redevelopment 
        contract within three years of the date of conveyance, the 
        Ramsey county board may by resolution declare the land to have 
        reverted to the state, and shall serve a notice of reversion, 
        with a copy of the declaration, by certified mail to the 
        subdivision and shall reimburse the subdivision for the 
        consideration for the lands from the tax-forfeited sale fund.  
        The Ramsey county board shall file for record with the Ramsey 
        county recorder or registrar of titles a certified copy of the 
        declaration of reversion and proof of service.  A certificate 
        made by a subdivision referring to a conveyance made to it and 
        stating that it has passed a resolution designating a developer 
        or approving a redevelopment contract for a housing 
        redevelopment project may be filed with the Ramsey county 
        recorder or registrar of titles, and the right of reverter in 
        favor of the state under this section will then terminate. 
           Subd. 4.  [REPORT BY SUBDIVISION.] Each subdivision to 
        which tax-forfeited lands have been conveyed under this section 
        for a value of less than its appraised value must file a report 
        with the commissioner of revenue by September 1, 2004, and by 
        September 1 of each third year thereafter.  The report shall 
        contain a description of the lands conveyed to it, a status of 
        the development efforts for the lands, the intended or actual 
        uses being made of the lands, and the amount of property taxes 
        being paid on the lands.  The commissioner shall retain each 
        report for a minimum of ten years.  Failure of a subdivision to 
        file a report shall be cause for the commissioner to declare a 
        reversion of the parcel under section 282.01, subdivision 1e. 
           [EFFECTIVE DATE.] This section is effective only after its 
        approval by a majority of the governing body of Ramsey county 
        and upon compliance with the provisions of Minnesota Statutes, 
        section 645.021, subdivision 3. 
           Sec. 67.  Minnesota Statutes 2000, section 469.040, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DESIGNATED HOUSING CORPORATION.] (a) To the 
        extent not exempt from taxation under section 272.01, 
        subdivision 1, property located within the exterior boundaries 
        of the White Earth an Indian reservation in the state 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. 
           (b) Property exempt from taxation under paragraph (a) 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 taxes 
        levied in 2001, payable in 2002, and thereafter. 
           Sec. 68.  Minnesota Statutes 2000, section 469.202, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ELIGIBILITY REQUIREMENTS FOR TARGETED 
        NEIGHBORHOODS.] An area within a city is eligible for 
        designation as a targeted neighborhood if the area meets two of 
        the following three criteria: 
           (a) The area had an unemployment rate that was twice the 
        unemployment rate for the Minneapolis and Saint Paul standard 
        metropolitan statistical area as determined by the 1980 most 
        recent federal decennial census. 
           (b) The median household income in the area was no more 
        than half the median household income for the Minneapolis and 
        Saint Paul standard metropolitan statistical area as determined 
        by the 1980 most recent federal decennial census. 
           (c) The area is characterized by residential dwelling units 
        in need of substantial rehabilitation.  An area qualifies under 
        this paragraph if 25 percent or more of the residential dwelling 
        units are in substandard condition as determined by the city, or 
        if 70 percent or more of the residential dwelling units in the 
        area were built before 1940 as determined by the 1980 most 
        recent federal decennial census. 
           [EFFECTIVE DATE.] This section is effective upon the 
        availability of the federal 2000 census data required to 
        determine eligibility requirements under this section. 
           Sec. 69.  Minnesota Statutes 2000, section 469.303, is 
        amended to read: 
           469.303 [ELIGIBILITY REQUIREMENTS.] 
           An area within the city is eligible for designation as an 
        enterprise zone if the area (1) includes census tracts eligible 
        for a federal empowerment zone or enterprise community as 
        defined by the United States Department of Housing and Urban 
        Development under Public Law Number 103-66, notwithstanding the 
        maximum zone population standard under the federal empowerment 
        zone program for cities with a population under 500,000, (2) is 
        an area within a city of the second class that is designated as 
        an economically depressed area by the United States Department 
        of Commerce, or (3) includes property located in St. Paul in a 
        transit zone as defined in Minnesota Statutes 2000, section 
        473.3915, subdivision 3. 
           Sec. 70.  Minnesota Statutes 2000, section 473.388, 
        subdivision 4, is amended to read: 
           Subd. 4.  [FINANCIAL ASSISTANCE.] The council may must 
        grant the requested financial assistance if it determines that 
        the proposed service is intended to replace the service to the 
        applying city or town or combination thereof by the council and 
        that the proposed service will meet the needs of the applicant 
        at least as efficiently and effectively as the existing service. 
           The amount of assistance which the council may must provide 
        to a system under this section may not exceed the sum of be less 
        than the sum of the amounts determined for each municipality 
        comprising the system as follows:  
           (a) the portion of the available local transit funds which 
        the applicant proposes to use to subsidize the proposed service; 
        and transit operating assistance grants received under this 
        subdivision by the municipality in calendar year 2001 or the tax 
        revenues for transit services levied by the municipality for 
        taxes payable in 2001, including that portion of the levy 
        derived from the areawide pool under section 473F.08, 
        subdivision 3, clause (a), plus the portion of the 
        municipality's aid under section 273.1398, subdivision 2, 
        attributable to the transit levy; times 
           (b) an amount of financial assistance bearing an identical 
        proportional relationship to the amount under clause (a) as the 
        total amount of funds used by the council to fund its transit 
        operations bears to the total amount of taxes collected by the 
        council under section 473.446. the ratio of (i) the 
        appropriation from the transit fund to the council for nondebt 
        transit operations for the current fiscal year to (ii) the total 
        levy certified by the council under section 473.446 and the 
        opt-out municipalities under this section for taxes payable in 
        2001, including the portion of homestead and agricultural credit 
        aid under section 273.1398, subdivision 2, attributable to 
        nondebt transit levies, times 
           (c) the ratio of (i) the municipality's total taxable 
        market value for taxes payable in the most recent year for which 
        data is available divided by the municipality's total taxable 
        market value for taxes payable in 2001, to (ii) the total 
        taxable market value of all property in the metropolitan area 
        for taxes payable in the most recent year for which data is 
        available divided by the total taxable market value of all 
        property in the metropolitan area for taxes payable in 2001.  
        The council shall pay the amount to be provided to the recipient 
        from the funds the council would otherwise use to fund its 
        transit operations.  
           For purposes of this section, "available local transit 
        funds" means 90 percent of the tax revenues which would accrue 
        to the council from the tax it levies under section 473.446 in 
        the applicant city or town or combination thereof.  
           For purposes of this section, "tax revenues" in the city or 
        town means the sum of the following: 
           (1) the nondebt spread levy, which is the total of the 
        taxes extended by application of the local tax rate for nondebt 
        purposes on the taxable net tax capacity; 
           (2) the portion of the fiscal disparity distribution levy 
        under section 473F.08, subdivision 3, attributable to nondebt 
        purposes; and 
           (3) the portion of the homestead credit and agricultural 
        credit aid and disparity reduction aid amounts under section 
        273.1398, subdivisions 2 and 3, attributable to nondebt purposes.
           Tax revenues do not include the state feathering 
        reimbursement under section 473.446. 
           [EFFECTIVE DATE.] This section is effective for calendar 
        year 2002 and subsequent years. 
           Sec. 71.  Minnesota Statutes 2000, section 473.388, 
        subdivision 7, is amended to read: 
           Subd. 7.  [LOCAL LEVY OPTION.] (a) A statutory or home rule 
        charter city or town that is eligible for assistance under this 
        section, in lieu of receiving the assistance, may levy a tax for 
        payment of the operating and capital expenditures for transit 
        and other related activities and to provide for payment of 
        obligations issued by the municipality for such purposes, 
        provided that the tax must be sufficient to maintain the level 
        of transit service provided in the municipality in the previous 
        year capital expenditures for transit and other related 
        activities, provided that property taxes were pledged to satisfy 
        the obligations, and provided that legislative appropriations 
        are insufficient to satisfy the obligations. 
           (b) The transit tax revenues derived by the municipality 
        may not exceed: 
           (1) for the first transit levy year and any subsequent 
        transit levy year immediately following a year in which the 
        municipality declines to make the levy, the maximum available 
        local transit funds for the municipality for taxes payable in 
        the current year under section 473.446, calculated as if the 
        percentage of transit tax revenues for the municipality were 88 
        percent instead of 90 percent, and multiplied by the 
        municipality's market value adjustment ratio; and 
           (2) for taxes levied in any year that immediately follows a 
        year in which the municipality elects to levy under this 
        subdivision, the maximum transit tax that the municipality may 
        have levied in the previous year under this subdivision, 
        multiplied by the municipality's market value adjustment ratio. 
           The commissioner of revenue shall certify the 
        municipality's levy limitation under this subdivision to the 
        municipality by June 1 of the levy year.  The tax must be 
        accumulated and kept in a separate fund to be known as the 
        "replacement transit fund." 
           (c) To enable the municipality to receive revenues 
        described in clauses (2) and (3) of the definition of "tax 
        revenues" in subdivision 4, that would otherwise be lost if the 
        municipality's transit tax levy was not treated as a successor 
        levy to that made by the council under section 473.446: 
           (1) in the first transit levy year and any subsequent 
        transit levy year immediately following a year in which the 
        municipality declined to make the levy, 88 percent of the 
        council's nondebt spread levy for the current taxes payable year 
        shall be treated as levied by the municipality, and not the 
        council, for purposes of section 473F.08, subdivision 3, for the 
        purpose of determining its local tax rate for the preceding 
        year; and 
           (2) 88 percent of the revenues described in clause (3) of 
        the definition of "tax revenues" in subdivision 4, payable in 
        the first transit levy year, or payable in any subsequent 
        transit levy year following a year in which a municipality 
        declined to make the levy, shall be permanently transferred from 
        the council to the municipality.  If a municipality levies a tax 
        under this subdivision in one year, but declines to levy in a 
        subsequent year, the aid transferred under this clause shall be 
        transferred back to the council. 
           (d) Any transit taxes levied under this subdivision are not 
        subject to, or counted towards, any limit hereafter imposed by 
        law on the levy of taxes upon taxable property within any 
        municipality unless the law specifically includes the transit 
        tax. 
           (e) This subdivision is consistent with the transit 
        redesign plan.  Eligible municipalities opting to levy the 
        transit tax operate under this subdivision shall continue to 
        meet the regional performance standards established by the 
        council. 
           (f) (c) Within the designated Americans with Disabilities 
        Act area, metro mobility remains the obligation of the state. 
           (g) For purposes of this subdivision, "transit levy year" 
        is any year in which the municipality elects to levy under this 
        subdivision. 
           (h) A municipality may not levy taxes under this 
        subdivision in any year unless it notifies the council and the 
        commissioner of revenue of its intent to levy before July 1 of 
        the levy year.  The notification must include the amount of the 
        municipality's proposed transit tax for the current levy year.  
        After June 30 in the levy year, a municipality's decision to 
        levy or not levy taxes under this subdivision is irrevocable for 
        that levy year. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and subsequent years. 
           Sec. 72.  Minnesota Statutes 2000, section 473.446, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WITHIN TRANSIT TAXING DISTRICT 
        METROPOLITAN AREA TRANSIT TAX.] For the purposes of sections 
        473.405 to 473.449 and the metropolitan transit system, except 
        as otherwise provided in this subdivision and subdivision 1b, 
        the council shall levy each year upon all taxable property 
        within the metropolitan transit taxing district area, defined in 
        section 473.121, subdivision 2, a transit tax consisting of: 
           (a) an amount which shall be used for payment of the 
        expenses of operating transit and paratransit service and to 
        provide for payment of obligations issued by the council under 
        section 473.436, subdivision 6; 
           (b) an additional amount, if any, the council determines to 
        be necessary to provide for the full and timely payment of its 
        certificates of indebtedness and other obligations outstanding 
        on July 1, 1985, to which property taxes under this section have 
        been pledged; and 
           (c) an additional amount necessary to provide full and 
        timely payment of certificates of indebtedness, bonds, including 
        refunding bonds or other obligations issued or to be issued 
        under section 473.39 by the council for purposes of acquisition 
        and betterment of property and other improvements of a capital 
        nature and to which the council has specifically pledged tax 
        levies under this clause.; and 
           The property tax levied by the council for general purposes 
        under paragraph (a) must not exceed the following amount for the 
        years specified: 
           (1) for taxes payable in 1995, the council's property tax 
        levy limitation for general transit purposes is equal to the 
        former regional transit board's property tax levy limitation for 
        general transit purposes under this subdivision, for taxes 
        payable in 1994, multiplied by an index for market valuation 
        changes equal to the total market valuation of all taxable 
        property located within the metropolitan transit taxing district 
        for the current taxes payable year divided by the total market 
        valuation of all taxable property located within the 
        metropolitan transit taxing district for the previous taxes 
        payable year; and 
           (2) for taxes payable in 1996 and subsequent years, the 
        product of (i) the council's property tax levy limitation for 
        general transit purposes for the previous year determined under 
        this subdivision before reduction by the amount levied by any 
        municipality in the previous year under section 473.388, 
        subdivision 7, multiplied by (ii) an index for market valuation 
        changes equal to the total market valuation of all taxable 
        property located within the metropolitan transit taxing district 
        for the current taxes payable year divided by the total market 
        valuation of all taxable property located within the 
        metropolitan transit taxing district for the previous taxes 
        payable year, minus the amount levied by any municipality in the 
        current levy year under section 473.388, subdivision 7. 
           The portion of the property tax levy for transit district 
        operating purposes attributable to a municipality that has 
        exercised a local levy option under section 473.388, subdivision 
        7, is the amount as determined under subdivision 1b.  The 
        portion of the property tax levy for transit district operating 
        purposes attributable to the remaining municipalities within the 
        transit district is found by subtracting the portions 
        attributable to the municipalities that have exercised a local 
        levy option under section 473.388, subdivision 7. 
           For the taxes payable year 1995, the index for market 
        valuation changes shall be multiplied by an amount equal to the 
        sum of the regional transit board's property tax levy limitation 
        for the taxes payable year 1994 and $160,665.  The $160,665 
        increase shall be a permanent adjustment to the levy limit base 
        used in determining the regional transit board's property tax 
        levy limitation for general purposes for subsequent taxes 
        payable years. 
           For the purpose of determining the council's property tax 
        levy limitation for general transit purposes under this 
        subdivision, "total market valuation" means the total market 
        valuation of all taxable property within the metropolitan 
        transit taxing district without valuation adjustments for fiscal 
        disparities (chapter 473F), tax increment financing (sections 
        469.174 to 469.179), and high voltage transmission lines 
        (section 273.425). 
           The county auditor shall reduce the tax levied pursuant to 
        this section and section 473.388 on all property within 
        statutory and home rule charter cities and towns that receive 
        full-peak service and limited off-peak service by an amount 
        equal to the tax levy that would be produced by applying a rate 
        of 0.510 percent of net tax capacity on the property.  The 
        county auditor shall reduce the tax levied pursuant to this 
        section and section 473.388 on all property within statutory and 
        home rule charter cities and towns that receive limited peak 
        service by an amount equal to the tax levy that would be 
        produced by applying a rate of 0.765 percent of net tax capacity 
        on the property.  The amounts so computed by the county auditor 
        shall be submitted to the commissioner of revenue as part of the 
        abstracts of tax lists required to be filed with the 
        commissioner under section 275.29.  Any prior year adjustments 
        shall also be certified in the abstracts of tax lists.  The 
        commissioner shall review the certifications to determine their 
        accuracy and may make changes in the certification as necessary 
        or return a certification to the county auditor for 
        corrections.  The commissioner shall pay to the council and to 
        the municipalities levying under section 473.388, subdivision 7, 
        the amounts certified by the county auditors on the dates 
        provided in section 273.1398, apportioned between the council 
        and the municipality in the same proportion as the total transit 
        levy is apportioned within the municipality.  There is annually 
        appropriated from the general fund in the state treasury to the 
        department of revenue the amounts necessary to make these 
        payments.  
           For the purposes of this subdivision, "full-peak and 
        limited off-peak service" means peak period regular route 
        service, plus weekday midday regular route service at intervals 
        longer than 60 minutes on the route with the greatest frequency; 
        and "limited peak period service" means peak period regular 
        route service only.  
           For the purposes of property taxes payable in the following 
        year, the council shall annually determine which cities and 
        towns qualify for the 0.510 percent or 0.765 percent tax 
        capacity rate reduction and shall certify this list to the 
        county auditor of the county wherein such cities and towns are 
        located on or before September 15.  No changes may be made to 
        the annual list after September 15. 
           (b) an additional amount necessary to provide full and 
        timely payment of certificates of indebtedness issued by the 
        council, after consultation with the commissioner of finance, if 
        revenues to the metropolitan area transit fund in the fiscal 
        year in which the indebtedness is issued increase over those 
        revenues in the previous fiscal year by a percentage less than 
        the percentage increase for the same period in the revised 
        consumer price index for all urban consumers for the St. 
        Paul-Minneapolis metropolitan area prepared by the United States 
        Department of Labor. 
           Indebtedness to which property taxes have been pledged 
        under paragraph (b) that is incurred in any fiscal year may not 
        exceed the amount necessary to make up the difference between 
        (1) the amount that the council received or expects to receive 
        in that fiscal year from the metropolitan area transit fund and 
        (2) the amount the council received from that fund in the 
        previous fiscal year multiplied by the percentage increase for 
        the same period in the revised consumer price index for all 
        urban consumers for the St. Paul-Minneapolis metropolitan area 
        prepared by the United States Department of Labor. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and subsequent years.  
           Sec. 73.  Minnesota Statutes 2000, section 473F.08, 
        subdivision 3, is amended to read: 
           Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
        apportion the levy of each governmental unit in the auditor's 
        county in the manner prescribed by this subdivision.  The 
        auditor shall: 
           (a) by August 20, determine the areawide portion of the 
        levy for each governmental unit by multiplying the local tax 
        rate of the governmental unit for the preceding levy year times 
        the distribution value set forth in subdivision 2, clause (b); 
        and 
           (b) by September 5, determine the local portion of the 
        current year's levy by subtracting the resulting amount from 
        clause (a) from the governmental unit's current year's levy.; 
           (c) for determinations made under clause (a) in the case of 
        school districts, for taxes payable in 2002, exclude the general 
        education tax rate and the portion of the referendum tax rate 
        attributable to the first $415 per pupil unit from the local tax 
        rate for the preceding levy year; 
           (d) for determinations made under clause (a) in the case of 
        the metropolitan council, for taxes payable in 2002, exclude the 
        transit operating tax rate from the local tax rate for the 
        preceding levy year; and 
           (e) for determinations made under clause (a) in the case of 
        transit opt-out cities, for taxes payable in 2002, exclude the 
        opt-out transit rate from the local tax rate for the preceding 
        levy year. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 74.  Minnesota Statutes 2000, section 477A.011, 
        subdivision 35, is amended to read: 
           Subd. 35.  [TAX EFFORT RATE.] "Tax effort rate" means the 
        sum of (1) the net levy for all cities plus (2) for aid payable 
        in 2002 only, the total aid payments to all cities under section 
        273.1398 in the previous year; divided by the sum of the city 
        net tax capacity for all cities.  For purposes of this section, 
        "net levy" means the city levy, after all adjustments, used for 
        calculating the local tax rate under section 275.08 for taxes 
        payable in the year prior to the aid distribution.  The fiscal 
        disparity distribution levy under chapter 276A or 473F is 
        included in net levy. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2002 and future years. 
           Sec. 75.  Minnesota Statutes 2000, section 477A.011, 
        subdivision 36, is amended to read: 
           Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
        paragraphs (b) to (n) (o), "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 by an additional $50,000 in calendar 
        years 2002 to 2011, 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, and by 
        $50,000 in calendar year 2002 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. 
           (o) The city aid base for a city with a population of 
        10,000 or more which is located outside of the seven-county 
        metropolitan area is increased in 2002 and thereafter, and the 
        maximum amount of total aid it may receive under section 
        477A.013, subdivision 9, paragraph (b) or (c), is also increased 
        in calendar year 2002 only, by an amount equal to the lesser of: 
           (1)(i) the total population of the city, as determined by 
        the United States Bureau of the Census, in the 2000 census, (ii) 
        minus 5,000, (iii) times 60; or 
           (2) $2,500,000. 
           (p) The city aid base is increased by $50,000 in 2002 and 
        thereafter, and the maximum amount of total aid it may receive 
        under section 477A.013, subdivision 9, paragraph (c), is also 
        increased by $50,000 in calendar year 2002 only, provided that: 
           (1) the city is located in the seven-county metropolitan 
        area; 
           (2) its population in 2000 is between 10,000 and 20,000; 
        and 
           (3) its commercial industrial percentage, as calculated for 
        city aid payable in 2001, was greater than 25 percent. 
           (q) The city aid base for a city is increased by $150,000 
        in calendar years 2002 to 2011 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 
        2002 only, provided that: 
           (1) the city had a population of at least 3,000 but no more 
        than 4,000 in 1999; 
           (2) its home county is located within the seven-county 
        metropolitan area; 
           (3) its pre-1940 housing percentage is less than 15 
        percent; and 
           (4) its city net tax capacity per capita for taxes payable 
        in 2000 is less than $900 per capita. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        aids payable in 2002. 
           Sec. 76.  Minnesota Statutes 2000, section 477A.013, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TOWNS.] In 1994 each town that had levied 
        for taxes payable in the prior year a local tax rate of at least 
        .008 shall receive a distribution equal to the amount it 
        received in 1993 under this section before any nonpermanent 
        reductions made under section 477A.0132.  In 1995 each town that 
        had levied for taxes payable in 1993 a local tax rate of at 
        least .008 shall receive a distribution equal to 102 percent of 
        the amount it received in 1994 under this section before any 
        increases or reductions under sections 16A.711, subdivision 5, 
        and 477A.0132.  In 1996 and subsequent years each town that had 
        levied for taxes payable in 1993 a local tax rate of at least 
        .008 shall receive a distribution equal to the amount it 
        received in the previous year under this section, adjusted for 
        inflation as provided under section 477A.03, subdivision 3 2002, 
        no town is eligible for a distribution under this subdivision.  
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2002 and subsequent years. 
           Sec. 77.  Minnesota Statutes 2000, section 477A.013, 
        subdivision 9, is amended to read: 
           Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
        1994 2002 and thereafter, each city shall receive an aid 
        distribution equal to the sum of (1) the city formula aid under 
        subdivision 8, and (2) its city aid base. 
           (b) The percentage increase for a first class city in 
        calendar year 1995 and thereafter, except for 2002, shall not 
        exceed the percentage increase in the sum of the aid to all 
        cities under this section in the current calendar year compared 
        to the sum of the aid to all cities in the previous year.  For 
        aids payable in 2002 only, the amount of the aid paid to a first 
        class city shall not exceed the sum of its aid amount for 
        calendar year 2001 under this section and its aid payment in 
        calendar year 2001 under section 273.1398, subdivision 2, by 
        more than 2.5 percent. 
           (c) For aids payable in all years except 2002, the total 
        aid for any city, except a first class city, shall not exceed 
        the sum of (1) ten percent of the city's net levy for the year 
        prior to the aid distribution plus (2) its total aid in the 
        previous year before any increases or decreases under sections 
        16A.711, subdivision 5, and 477A.0132.  For aids payable in 2002 
        only, the total aid for any city, except a first class city, 
        shall not exceed 40 percent of the sum of (1) the city's net 
        levy for taxes payable in the year prior to the aid distribution 
        plus (2) its total aid in the previous year under section 
        273.1398, subdivision 2, before any increases or decreases under 
        sections 16A.711, subdivision 5, and 477A.0132. 
           (d) Notwithstanding paragraph (c), in 1995 only, for cities 
        which in 1992 or 1993 transferred an amount from governmental 
        funds to their sewer and water fund in an amount greater than 
        their net levy for taxes payable in the year in which the 
        transfer occurred, the total aid shall not exceed the sum of (1) 
        20 percent of the city's net levy for the year prior to the aid 
        distribution plus (2) its total aid in the previous year before 
        any increases or decreases under sections 16A.711, subdivision 
        5, and 477A.0132. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2002 and future years. 
           Sec. 78.  Minnesota Statutes 2000, 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 2002 under section 
        477A.013, subdivision 9, are limited to $380,565,489.  For aids 
        payable in 2000, 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) $140,000,000.  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 
        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 2003 under 
        section 477A.06.  For aids payable in 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 2002 and future years. 
           Sec. 79.  [477A.07] [RENTAL HOUSING TAX BASE REPLACEMENT 
        AID.] 
           Subdivision 1.  [AID AMOUNT.] (a) For aid payable in 2003, 
        each county and city is eligible for aid equal to the amount by 
        which (i) 0.3 percent of the assessment year 2001 taxable market 
        value of class 4a property, plus .25 percent of the assessment 
        year 2001 market value of class 4b property, as defined in 
        section 273.13, subdivision 25, exceeds (ii) 0.4 percent of the 
        jurisdiction's total taxable net tax capacity for taxes payable 
        in 2002, multiplied by the jurisdiction's average tax rate for 
        taxes payable in 2002. 
           (b) For aid payable in 2004, each county and city is 
        eligible for aid equal to the amount by which (i) 0.25 percent 
        of the assessment year 2002 taxable market value of class 4a 
        property, as defined in section 273.13, subdivision 25, exceeds 
        (ii) 0.4 percent of the jurisdiction's total taxable net tax 
        capacity for taxes payable in 2003, multiplied by the 
        jurisdiction's average tax rate for taxes payable in 2003. 
           Subd. 2.  [COUNTY AID.] Each county's aid amount for 2003 
        determined under subdivision 1 must be permanently added to the 
        county's homestead and agricultural credit aid base under 
        section 273.1398 for aid payable in 2003.  Each county's aid 
        amount for 2004 determined under subdivision 1 must be 
        permanently added to the county's homestead and agricultural 
        credit aid base for aid payable in 2004. 
           Subd. 3.  [CITY AID.] Each city's 2003 aid amount 
        determined under subdivision 1 must be permanently added to its 
        city aid base under section 477A.011, subdivision 36, for aid 
        payable in 2003.  Each city's 2004 aid amount determined under 
        subdivision 1 must be permanently added to its city aid base 
        under section 477A.011, subdivision 36, for aid payable in 2004. 
           Subd. 4.  [APPROPRIATION INCREASE.] For aid payable in 
        2003, the total aid amount payable to cities under section 
        477A.03, subdivision 2, paragraph (d), is permanently increased 
        by the total amount payable to all cities under subdivision 3 
        for aid payable in 2003.  For aid payable in 2004, the total aid 
        amount payable to cities under section 477A.03, subdivision 2, 
        paragraph (d), is permanently increased by the total amount 
        payable to all cities under subdivision 3 for aid payable in 
        2004. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2003 and subsequent years. 
           Sec. 80.  Minnesota Statutes 2000, section 477A.12, is 
        amended to read: 
           477A.12 [ANNUAL APPROPRIATIONS; LANDS ELIGIBLE; 
        CERTIFICATION OF ACREAGE.] 
           Subdivision 1.  [TYPES OF LAND; PAYMENTS.] (a) 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 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, 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) The amount determined under paragraph (a), clause (1), 
        is payable for land that is acquired from a private owner and 
        owned by the department of transportation for the purpose of 
        replacing wetland losses caused by transportation projects, but 
        only if the county contains more than 500 acres of such land at 
        the time the certification is made under subdivision 2. 
           Subd. 2.  [PROCEDURE.] 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 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 transportation shall determine and 
        certify to the commissioner of revenue by March 1 of the payment 
        year the number of acres of land and the appraised value of the 
        land described in subdivision 1, paragraph (b), but only if it 
        exceeds 500 acres. 
           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 and the commissioner of transportation by 
        March 1 of the payment year. 
           (c) Subd 3.  [DETERMINATION OF APPRAISED VALUE.] 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 is effective for payments in 
        2002 and thereafter. 
           Sec. 81.  Minnesota Statutes 2000, section 477A.14, is 
        amended to read: 
           477A.14 [USE OF FUNDS.] 
           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, as adjusted for inflation under 
        section 477A.145, for each acre of acquired natural resources 
        land and each acre of land described in section 477A.12, 
        subdivision 1, paragraph (b), and 7.5 cents, 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 is effective for payments in 
        2002 and thereafter. 
           Sec. 82.  Laws 1992, chapter 499, article 7, section 31, as 
        amended by Laws 1998, chapter 398, article 1, section 39, Laws 
        1999, chapter 241, article 1, section 54, and Laws 2000, chapter 
        489, article 2, section 28, is amended to read: 
           Sec. 31.  [REPEALER.] 
           Minnesota Statutes 1990, sections 124A.02, subdivision 24; 
        124A.23, subdivisions 2 and 3; 124A.26, subdivisions 2 and 3; 
        124A.27; 124A.28; and 124A.29, subdivision 2; and Minnesota 
        Statutes 1991 Supplement, sections 124A.02, subdivisions 16 and 
        23; 124A.03, subdivisions 1b, 1c, 1d, 1e, 1f, 1g, 1h, and 1i; 
        124A.04; 124A.22, subdivisions 2, 3, 4, 4a, 4b, 8, and 9; 
        124A.23, subdivisions 1, 4, and 5; 124A.24; 124A.26, subdivision 
        1; and 124A.29, subdivision 1, are repealed effective June 30, 
        2004; Laws 1991, chapter 265, article 7, section 35, is repealed.
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 83.  [CONVEYANCE OF TAX-FORFEITED LAND; DAKOTA 
        COUNTY.] 
           (a) If special school district No. 6 conveys the land 
        described in paragraph (c) to the state according to Minnesota 
        Statutes, section 282.01, subdivision 1d, then, notwithstanding 
        any other provision of Minnesota Statutes, chapter 282, the 
        commissioner of revenue shall reconvey the land described in 
        paragraph (c) to special school district No. 6 for no 
        consideration.  
           (b) The conveyance must be in a form approved by the 
        attorney general.  Notwithstanding Minnesota Statutes, chapter 
        282, or other law to the contrary, special school district No. 6 
        may use or sell the land for other than a public use.  
        Notwithstanding Minnesota Statutes, chapter 282, or other law to 
        the contrary, the state shall not retain a reversionary interest 
        and shall convey the land free of the trust in favor of the 
        taxing district. 
           (c) The land to be conveyed is in the city of South St. 
        Paul, Dakota county, and is described as:  
           (1) Lots 4, 5, 6, and 7, Block 1, Lookout Park Addition; 
           (2) Lots 25 and 26, Block 1, Lookout Park Addition; 
           (3) Lots 11, 12, 13, 14, 15, 16, 17, 18, 19, and 20, Block 
        2, Lookout Park Addition; 
           (4) Lots 1, 2, 3, 4, and 5, Block 1, Bryants First Addition 
        to the city of South St. Paul; and 
           (5) Lot 21, Block 1, Bryants First Addition to the city of 
        South St. Paul, together with that part of the vacated alley and 
        vacated Stanley Place accruing thereto. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 84.  [MINNEHAHA CREEK WATERSHED DISTRICT.] 
           Subdivision 1.  [LEVY AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 103D.905, subdivision 3, the 
        Minnehaha Creek watershed district may annually levy an 
        additional amount up to $50,000 for enforcing rules and permits. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective, 
        without local approval, beginning with taxes levied in 2001, 
        payable in 2002. 
           Sec. 85.  [PRIVATE SALE OF TAX-FORFEITED LAND; ST. LOUIS 
        COUNTY.] 
           (a) Notwithstanding the public sale provisions of Minnesota 
        Statutes, chapter 282, or other law to the contrary, St. Louis 
        county may sell by private sale the tax-forfeited land described 
        in paragraph (c) to one or more of the owners at the time of 
        forfeiture. 
           (b) The conveyance must be in a form approved by the 
        attorney general for a consideration of taxes due on the 
        property and any penalties, interest, and costs. 
           (c) The land to be sold is located in St. Louis county and 
        is described as: 
           (1) Parcel 200-10-1720:  Sec. 11, Twp. 61, Rge 19 NW 1/4 of 
        NW 1/4; and 
           (2) Parcel 200-10-280:  Sec. 2, Twp. 61, Rge 19 SW 1/4 of 
        SW 1/4. 
           (d) The county has determined that the county's land 
        management interests would best be served if the lands were 
        returned to private ownership. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 86.  [RED RIVER WATERSHED MANAGEMENT BOARD; PAYMENT IN 
        LIEU OF TAXES.] 
           (a) The Red River watershed management board may spend 
        money from its general fund to compensate counties and townships 
        for lost tax revenue from land that becomes tax exempt after it 
        is acquired by the board or a member watershed district for 
        flood damage reduction project.  The amount that may be paid 
        under this section to a county or township must not exceed the 
        tax that was payable to that taxing jurisdiction on the land in 
        the last taxes payable year before the land became exempt due to 
        the acquisition, not to exceed $4 per acre, multiplied by 20.  
        This total amount may be paid in one payment, or in equal annual 
        installments over a period that does not exceed 20 years.  A 
        member watershed district of the Red River management board may 
        spend money from its construction fund for the purposes 
        described in this section. 
           (b) For the purposes of this section, "Red River watershed 
        management board" refers to the board established by Laws 1976, 
        chapter 162, section 1, as amended by Laws 1982, chapter 474, 
        section 1, Laws 1983, chapter 338, section 1, Laws 1989 First 
        Special Session chapter 1, article 5, section 45, Laws 1991, 
        chapter 167, section 1, and Laws 1998, chapter 389, article 3, 
        section 29. 
           Sec. 87.  [INDEPENDENT SCHOOL DISTRICT NO. 319, 
        NASHWAUK-KEEWATIN, ADDITIONAL LEVY.] 
           In addition to other levies, independent school district 
        No. 319, Nashwauk-Keewatin, may levy an amount up to $25,000 
        each year to finance the Nashwauk School-Community Library and 
        Community Service Project. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 88.  [WYOMING TOWNSHIP; CITY OF CHISAGO CITY; 
        MUNICIPAL REIMBURSEMENT.] 
           Notwithstanding the limitation on duration or equality of 
        payment imposed under Minnesota Statutes, section 414.036, the 
        city of Chisago City may provide reimbursement for orderly 
        annexed property to the town of Wyoming for a period and in such 
        amounts agreed to by the city and the town under a joint powers 
        agreement entered into for the purposes of establishing a joint 
        commercial and business park in the annexed area. 
           [EFFECTIVE DATE.] This section is effective July 1, 2002. 
           Sec. 89.  [FORGIVENESS OF PENALTY AND INTEREST.] 
           If the owner of record of property located in St. Louis 
        county that has parcel number 060-0030-03840 enters into an 
        agreement with the county by August 15, 2001, to make 
        installment payments over a ten-year period of the amount of 
        taxes and special assessments due on the property for the 1997 
        payable year and the owner makes the payments required under the 
        agreement when due, the amount of penalties, interest, and 
        related fees due as of August 15, 2001, with respect to the 
        delinquent taxes will not be required to be paid. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 90.  [RENEWAL OF RULEMAKING AUTHORITY.] 
           Notwithstanding Minnesota Statutes, section 14.125, the 
        Minnesota housing finance agency may adopt administrative rules 
        under Minnesota Statutes, chapter 14, to carry out the 
        provisions of Minnesota Statutes, section 462A.071, and 
        determinations made under Minnesota Statutes, section 462A.071, 
        subdivision 11, paragraph (b), are valid until January 1, 2003. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 91.  [PROPOSED NOTICES; PUBLIC HEARINGS; TAXES PAYABLE 
        2002 ONLY.] 
           Subdivision 1.  [PUBLIC HEARINGS.] The public hearing 
        requirements contained in Minnesota Statutes, section 275.065, 
        are suspended for property taxes levied in 2001, payable in 
        2002.  However, this does not prohibit a taxing authority from 
        holding a public hearing on its proposed levy if it so chooses.  
        The hearing requirements contained in Minnesota Statutes, 
        section 275.065, are reinstated beginning for taxes payable in 
        2003. 
           Subd. 2.  [PROPOSED NOTICES.] (a) The parcel-specific 
        notice requirements contained in Minnesota Statutes, section 
        275.065, are suspended for property taxes levied in 2001, 
        payable in 2002, and are replaced by the requirements contained 
        in this section.  The payable 2002 notice shall be 
        parcel-specific, unless waived by the commissioner in 
        extenuating circumstances as provided in subdivision 3.  The 
        notice shall contain the amount of property taxes that each of 
        the taxing authorities propose to collect from the parcel for 
        taxes payable in 2002.  The proposed amount shall be shown 
        separately for the county, city or town, school district, sum of 
        the special taxing districts, the state general tax, tax 
        increment, fiscal disparities, and the total tax of all taxing 
        authorities.  In the case of school districts, the state 
        mandated school levy, which will show a zero levy due to the 
        state takeover, the voter approved levies, and the other levies 
        should be itemized separately, if possible.  The amount of any 
        residential homestead market value credit and agricultural 
        homestead market value credit, and the resulting net tax shall 
        be listed. 
           (b) The parcel's total net tax for taxes payable in 2001 
        shall be listed on the notice.  The notice shall also contain 
        the property classification and the taxable market value of the 
        parcel for taxes payable in 2001 and 2002. 
           (c) The commissioner of revenue shall prescribe the form of 
        the notice and may modify its contents as necessary, provided 
        that, to the extent possible, the information requested in this 
        section is contained in the notice.  The notices shall be mailed 
        by December 14, 2001. 
           Subd. 3.  [WAIVERS.] Based on information supplied by a 
        particular county, and at the request of the county board, the 
        commissioner may waive the requirement for parcel specific 
        notices or modify the form of the notices for a specific county 
        and may waive any procedure or deadline having to do with the 
        administration of the property tax, if the commissioner 
        determines that doing so will not materially prejudice the 
        rights of taxpayers in that county.  This authority does not 
        extend to the provisions of Minnesota Statutes, chapters 279, 
        280, 281, 282, and 284. 
           Subd. 4.  [SUPERSEDES.] This section supersedes the public 
        hearing and notice requirements in Minnesota Statutes, section 
        275.065, for taxes payable in 2002. 
           [EFFECTIVE DATE.] This section is effective only for 
        hearings in 2001 and parcel-specific notices and property tax 
        administration procedures and deadlines related only to taxes 
        levied in 2001, payable in 2002. 
           Sec. 92.  [REPORT ON ASSESSMENT PRACTICES AND MARKET 
        VALUES.] 
           The department of revenue shall report to the legislature 
        each year by March 1, the following information on values and 
        assessment practices.  The information should be provided by 
        major types of property on a statewide basis and at the most 
        disaggregate jurisdictional level that is useful and 
        appropriate.  The information must include: 
           (1) recent market value trends and, to the extent possible, 
        projections of market value trends for up to five years; 
           (2) analysis of the effects of the limited market value 
        law; 
           (3) tax shift implications of market value trends and 
        limited market value; 
           (4) assessment quality indicators such as sales ratios and 
        coefficients of dispersion; 
           (5) to the extent possible, consideration should be given 
        to quality factors such as: 
           (i) number of sales; 
           (ii) time period; 
           (iii) geographical area; and 
           (iv) other; 
           (6) summary of state board orders; and 
           (7) percentage of parcels that change in value per year. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 93.  [STATE AID CERTIFICATIONS.] 
           The commissioner of revenue is allowed until September 1, 
        2001, to certify to the various local units of government the 
        state aid or reimbursement amounts administered or paid by the 
        commissioner that such units are to receive in calendar year 
        2002. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 94.  [CLASS 4D; TAXES PAYABLE IN 2003.] 
           If a parcel of property qualified under Minnesota Statutes, 
        section 273.126, for classification of all or part of its value 
        as class 4d for property taxes payable in 2002, the same 
        percentage of the value of the parcel qualifies for 
        classification as class 4d for taxes payable in 2003 as 
        qualified for taxes payable in 2002.  The income restriction and 
        rent restriction agreement remain in effect for calendar year 
        2003, but no application for designation need be made under 
        Minnesota Statutes, section 462A.071.  A property subject to a 
        rent restriction agreement may elect to terminate the agreement 
        for taxes payable in 2003 and cease to qualify as class 4d. 
           Sec. 95.  [APPROPRIATION.] 
           $5,000,000 is appropriated from the general fund to the 
        metropolitan council in fiscal year 2002 for transition revenue 
        associated with the conversion of metropolitan area transit 
        services funding for calendar year 2002. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 96.  [REPEALER.] 
           (a) Minnesota Statutes 2000, sections 273.13, subdivision 
        24a; 273.1382; 273.1399; 275.078; 275.08, subdivision 1e; 
        473.446, subdivisions 1a and 1b; and 473.3915, are repealed 
        effective for taxes levied in 2001, payable in 2002, and 
        thereafter and aids or credits payable in 2002 and thereafter. 
           (b) Laws 1988, chapter 426, section 1; Laws 1988, chapter 
        702, section 16; Laws 1992, chapter 511, article 2, section 52, 
        as amended by Laws 1997, chapter 231, article 2, section 50, and 
        Laws 1998, chapter 389, article 3, section 32; Laws 1996, 
        chapter 471, article 8, section 45; Laws 1999, chapter 243, 
        article 6, section 14; Laws 1999, chapter 243, article 6, 
        section 15; and Laws 2000, chapter 490, article 6, section 17, 
        are repealed effective for taxes levied in 2001, payable in 2002 
        and thereafter. 
           (c) Minnesota Statutes 2000, sections 126C.30; 126C.31; 
        126C.32; 126C.33; 126C.34; 126C.35; and 126C.36, are repealed 
        effective July 1, 2001. 
           (d) Minnesota Statutes 2000, section 273.126 and 462A.071, 
        are repealed effective for property taxes payable in 2004, and 
        any agreement entered into pursuant to the provisions of those 
        sections expires, effective January 1, 2004, regardless of the 
        term of the agreement. 

                                   ARTICLE 4 
                              PROPERTY TAX REFUND 
           Section 1.  Minnesota Statutes 2000, section 290A.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  [HOMESTEAD.] "Homestead" means the dwelling 
        occupied as the claimant's principal residence and so much of 
        the land surrounding it, not exceeding ten acres, as is 
        reasonably necessary for use of the dwelling as a home and any 
        other property used for purposes of a homestead as defined in 
        section 273.13, subdivision 22, except for agricultural land 
        assessed as part of a homestead pursuant to section 273.13, 
        subdivision 23, "homestead" is limited to the first $600,000 of 
        market value or, where the farm homestead is rented, house and 
        garage and immediately surrounding one acre of land.  The 
        homestead may be owned or rented and may be a part of a 
        multidwelling or multipurpose building and the land on which it 
        is built.  A manufactured home, as defined in section 273.125, 
        subdivision 8, or a park trailer taxed as a manufactured home 
        under section 168.012, subdivision 9, assessed as personal 
        property may be a dwelling for purposes of this subdivision. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        refunds based on property taxes payable in 2002. 
           Sec. 2.  Minnesota Statutes 2000, section 290A.03, 
        subdivision 13, is amended to read: 
           Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
        payable" means the property tax exclusive of special 
        assessments, penalties, and interest payable on a claimant's 
        homestead after deductions made under sections 273.135, 
        273.1382, 273.1391, 273.42, subdivision 2, and any other state 
        paid property tax credits in any calendar year, and after any 
        refund claimed and allowable under section 290A.04, subdivision 
        2h, that is first payable in the year that the property tax is 
        payable.  In the case of a claimant who makes ground lease 
        payments, "property taxes payable" includes the amount of the 
        payments directly attributable to the property taxes assessed 
        against the parcel on which the house is located.  No 
        apportionment or reduction of the "property taxes payable" shall 
        be required for the use of a portion of the claimant's homestead 
        for a business purpose if the claimant does not deduct any 
        business depreciation expenses for the use of a portion of the 
        homestead in the determination of federal adjusted gross 
        income.  For homesteads which are manufactured homes as defined 
        in section 273.125, subdivision 8, and for homesteads which are 
        park trailers taxed as manufactured homes under section 168.012, 
        subdivision 9, "property taxes payable" shall also include 19 
        percent of the gross rent paid in the preceding year for the 
        site on which the homestead is located.  When a homestead is 
        owned by two or more persons as joint tenants or tenants in 
        common, such tenants shall determine between them which tenant 
        may claim the property taxes payable on the homestead.  If they 
        are unable to agree, the matter shall be referred to the 
        commissioner of revenue whose decision shall be final.  Property 
        taxes are considered payable in the year prescribed by law for 
        payment of the taxes. 
           In the case of a claim relating to "property taxes 
        payable," the claimant must have owned and occupied the 
        homestead on January 2 of the year in which the tax is payable 
        and (i) the property must have been classified as homestead 
        property pursuant to section 273.124, on or before December 15 
        of the assessment year to which the "property taxes payable" 
        relate; or (ii) the claimant must provide documentation from the 
        local assessor that application for homestead classification has 
        been made on or before December 15 of the year in which the 
        "property taxes payable" were payable and that the assessor has 
        approved the application. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        refunds based on property taxes payable in 2002. 
           Sec. 3.  Minnesota Statutes 2000, section 290A.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [HOMEOWNERS.] A claimant whose property taxes 
        payable are in excess of the percentage of the household income 
        stated below shall pay an amount equal to the percent of income 
        shown for the appropriate household income level along with the 
        percent to be paid by the claimant of the remaining amount of 
        property taxes payable.  The state refund equals the amount of 
        property taxes payable that remain, up to the state refund 
        amount shown below.  
                              Percent           Percent    Maximum
        Household Income     of Income          Paid by     State
                                                Claimant    Refund
            $0 to 1,029     1.2 percent        18 percent   $440
            $0 to 1,189     1.0 percent        15 percent   $1,450
         1,030 to 2,059     1.3 percent        18 percent   $440
         1,190 to 2,379     1.1 percent        15 percent   $1,450
         2,060 to 3,099     1.4 percent        20 percent   $440
         2,380 to 3,589     1.2 percent        15 percent   $1,410
         3,100 to 4,129     1.6 percent        20 percent   $440
         3,590 to 4,789     1.3 percent        20 percent   $1,410
         4,130 to 5,159     1.7 percent        20 percent   $440
         4,790 to 5,979     1.4 percent        20 percent   $1,360
         5,160 to 7,229     1.9 percent        25 percent   $440
         5,980 to 8,369     1.5 percent        20 percent   $1,360
         7,230 to 8,259     2.1 percent        25 percent   $440
         8,370 to 9,559     1.6 percent        25 percent   $1,310
         8,260 to 9,289     2.2 percent        25 percent   $440
         9,560 to 10,759    1.7 percent        25 percent   $1,310
         9,290 to 10,319    2.3 percent        30 percent   $440
        10,760 to 11,949    1.8 percent        25 percent   $1,260
        10,320 to 11,349    2.4 percent        30 percent   $440
        11,950 to 13,139    1.9 percent        30 percent   $1,260
        11,350 to 12,389    2.5 percent        30 percent   $440
        13,140 to 14,349    2.0 percent        30 percent   $1,210
        12,390 to 14,449    2.6 percent        30 percent   $440
        14,350 to 16,739    2.1 percent        30 percent   $1,210
        14,450 to 15,479    2.8 percent        35 percent   $440
        16,740 to 17,929    2.2 percent        35 percent   $1,160
        15,480 to 16,509    3.0 percent        35 percent   $440
        17,930 to 19,119    2.3 percent        35 percent   $1,160
        16,510 to 17,549    3.2 percent        40 percent   $440
        19,120 to 20,319    2.4 percent        35 percent   $1,110
        17,550 to 21,669    3.3 percent        40 percent   $440
        20,320 to 25,099    2.5 percent        40 percent   $1,110
        21,670 to 24,769    3.4 percent        45 percent   $440
        25,100 to 28,679    2.6 percent        40 percent   $1,070
        24,770 to 30,959    3.5 percent        45 percent   $440
        28,680 to 35,849    2.7 percent        40 percent   $1,070
        30,960 to 36,119    3.5 percent        45 percent   $440
        35,850 to 41,819    2.8 percent        45 percent   $970
        36,120 to 41,279    3.7 percent        50 percent   $440
        41,820 to 47,799    3.0 percent        45 percent   $970
        41,280 to 58,829    4.0 percent        50 percent   $440
        47,800 to 53,779    3.2 percent        45 percent   $870
        58,830 to 59,859    4.0 percent        50 percent   $310
        53,780 to 59,749    3.5 percent        50 percent   $780
        59,860 to 60,889    4.0 percent        50 percent   $210
        59,750 to 65,729    4.0 percent        50 percent   $680
        60,890 to 61,929    4.0 percent        50 percent   $100 
        65,730 to 69,319    4.0 percent        50 percent   $580
        69,320 to 71,719    4.0 percent        50 percent   $480
        71,720 to 74,619    4.0 percent        50 percent   $390
        74,620 to 77,519    4.0 percent        50 percent   $290
           The payment made to a claimant shall be the amount of the 
        state refund calculated under this subdivision.  No payment is 
        allowed if the claimant's household income is $61,930 $77,520 or 
        more. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        refunds based on property taxes payable in 2002. 
           Sec. 4.  Minnesota Statutes 2000, section 290A.04, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [RENTERS.] A claimant whose rent constituting 
        property taxes exceeds the percentage of the household income 
        stated below must pay an amount equal to the percent of income 
        shown for the appropriate household income level along with the 
        percent to be paid by the claimant of the remaining amount of 
        rent constituting property taxes.  The state refund equals the 
        amount of rent constituting property taxes that remain, up to 
        the maximum state refund amount shown below.  
                              Percent           Percent      Maximum
        Household Income     of Income          Paid by        State
                                                Claimant      Refund
        $     0 to 3,099
              0 to 3,589     1.0 percent       5 percent    $1,030 $1,190
          3,100 to 4,129
          3,590 to 4,779     1.0 percent      10 percent    $1,030 $1,190
          4,130 to 5,159
          4,780 to 5,969     1.1 percent      10 percent    $1,030 $1,190
          5,160 to 7,229
          5,970 to 8,369     1.2 percent      10 percent    $1,030 $1,190
          7,230 to 9,289
          8,370 to 10,759    1.3 percent      15 percent    $1,030 $1,190
          9,290 to 10,319
         10,760 to 11,949    1.4 percent      15 percent    $1,030 $1,190
         10,320 to 11,349
         11,950 to 13,139    1.4 percent      20 percent    $1,030 $1,190
         11,350 to 13,419
         13,140 to 15,539    1.5 percent      20 percent    $1,030 $1,190
         13,420 to 14,449
         15,540 to 16,729    1.6 percent      20 percent    $1,030 $1,190
         14,450 to 15,479
         16,730 to 17,919    1.7 percent      25 percent    $1,030 $1,190
         15,480 to 17,549
         17,920 to 20,319    1.8 percent      25 percent    $1,030 $1,190
         17,550 to 18,579
         20,320 to 21,509    1.9 percent      30 percent    $1,030 $1,190
         18,580 to 19,609
         21,510 to 22,699    2.0 percent      30 percent    $1,030 $1,190
         19,610 to 20,639
         22,700 to 23,899    2.2 percent      30 percent    $1,030 $1,190
         20,640 to 21,669
         23,900 to 25,089    2.4 percent      30 percent    $1,030 $1,190
         21,670 to 22,709
         25,090 to 26,289    2.6 percent      35 percent    $1,030 $1,190
         22,710 to 23,739
         26,290 to 27,489    2.7 percent      35 percent    $1,030 $1,190
         23,740 to 24,769
         27,490 to 28,679    2.8 percent      35 percent    $1,030 $1,190
         24,770 to 25,799
         28,680 to 29,869    2.9 percent      40 percent    $1,030 $1,190
         25,800 to 26,839
         29,870 to 31,079    3.0 percent      40 percent    $1,030 $1,190
         26,840 to 27,869
         31,080 to 32,269    3.1 percent      40 percent    $1,030 $1,190
         27,870 to 28,899
         32,270 to 33,459    3.2 percent      40 percent    $1,030 $1,190
         28,900 to 29,929
         33,460 to 34,649    3.3 percent      45 percent    $  930 $1,080
         29,930 to 30,959
         34,650 to 35,849    3.4 percent      45 percent    $  830 $  960
         30,960 to 31,999
         35,850 to 37,049    3.5 percent      45 percent    $  720 $  830
         32,000 to 33,029
         37,050 to 38,239    3.5 percent      50 percent    $  620 $  720
         33,030 to 34,059
         38,240 to 39,439    3.5 percent      50 percent    $  520 $  600
         34,060 to 35,089
         39,440 to 40,629    3.5 percent      50 percent    $  310 $  360
         35,090 to 36,119
         40,630 to 41,819    3.5 percent      50 percent    $  100 $  120
           The payment made to a claimant is the amount of the state 
        refund calculated under this subdivision.  No payment is allowed 
        if the claimant's household income is $36,120 $41,820 or more. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        refunds based on rent constituting property taxes paid in 2001. 
           Sec. 5.  Minnesota Statutes 2000, section 290A.04, 
        subdivision 2h, is amended to read: 
           Subd. 2h.  [ADDITIONAL REFUND.] (a) Beginning with gross 
        property taxes payable in 2003, if the gross property taxes 
        payable on a homestead increase more than 12 percent over the 
        net property taxes payable in the prior year on the same 
        property that is owned and occupied by the same owner on January 
        2 of both years, and the amount of that increase is $100 or 
        more, a claimant who is a homeowner shall be allowed an 
        additional refund equal to 60 percent of the amount of the 
        increase over the greater of 12 percent of the prior year's net 
        property taxes payable or $100.  This subdivision shall not 
        apply to any increase in the gross property taxes payable 
        attributable to improvements made to the homestead after the 
        assessment date for the prior year's taxes.  This subdivision 
        shall not apply to any increase in the gross property taxes 
        payable attributable to the termination of valuation exclusions 
        under section 273.11, subdivision 16. 
           The maximum refund allowed under this subdivision is $1,000.
           (b) For purposes of this subdivision, the following terms 
        have the meanings given: 
           (1) "Net property taxes payable" means property taxes 
        payable minus refund amounts for which the claimant qualifies 
        pursuant to subdivision 2 and this subdivision.  
           (2) "gross property taxes payable" means net property taxes 
        payable determined without regard to the refund allowed under 
        this subdivision. 
           (c) In addition to the other proofs required by this 
        chapter, each claimant under this subdivision shall file with 
        the property tax refund return a copy of the property tax 
        statement for taxes payable in the preceding year or other 
        documents required by the commissioner. 
           (d) Upon request, the appropriate county official shall 
        make available the names and addresses of the property taxpayers 
        who may be eligible for the additional property tax refund under 
        this section.  The information shall be provided on a magnetic 
        computer disk.  The county may recover its costs by charging the 
        person requesting the information the reasonable cost for 
        preparing the data.  The information may not be used for any 
        purpose other than for notifying the homeowner of potential 
        eligibility and assisting the homeowner, without charge, in 
        preparing a refund claim. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        refunds based on property taxes payable in 2002. 
           Sec. 6.  Minnesota Statutes 2000, section 290A.04, 
        subdivision 4, is amended to read: 
           Subd. 4.  [INFLATION ADJUSTMENT.] Beginning for property 
        tax refunds payable in calendar year 1996 2002, the commissioner 
        shall annually adjust the dollar amounts of the income 
        thresholds and the maximum refunds under subdivisions 2 and 2a 
        for inflation.  The commissioner shall make the inflation 
        adjustments in accordance with section 290.06, subdivision 2d 1f 
        of the Internal Revenue Code, except that for purposes of this 
        subdivision the percentage increase shall be determined from the 
        year ending on June 30, 1994 2000, to the year ending on June 30 
        of the year preceding that in which the refund is payable.  The 
        commissioner shall use the appropriate percentage increase to 
        annually adjust the income thresholds and maximum refunds under 
        subdivisions 2 and 2a for inflation without regard to whether or 
        not the income tax brackets are adjusted for inflation in that 
        year.  The commissioner shall round the thresholds and the 
        maximum amounts, as adjusted to the nearest $10 amount.  If the 
        amount ends in $5, the commissioner shall round it up to the 
        next $10 amount.  
           The commissioner shall annually announce the adjusted 
        refund schedule at the same time provided under section 290.06.  
        The determination of the commissioner under this subdivision is 
        not a rule under the Administrative Procedure Act. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 

                                   ARTICLE 5 
                       STATE TAKEOVER OF COUNTY SERVICES 
           Section 1.  Minnesota Statutes 2000, section 97A.065, 
        subdivision 2, as amended by Laws 2001, chapter 185, section 23, 
        is amended to read: 
           Subd. 2.  [FINES AND FORFEITED BAIL.] (a) Fines and 
        forfeited bail collected from prosecutions of violations of:  
        the game and fish laws or rules adopted thereunder; sections 
        84.091 to 84.15 or rules adopted thereunder; sections 84.81 to 
        84.91 or rules adopted thereunder; section 169A.20, when the 
        violation involved an off-road recreational vehicle as defined 
        in section 169A.03, subdivision 16; chapter 348; and any other 
        law relating to wild animals or aquatic vegetation, must be paid 
        to the treasurer of the county where the violation is 
        prosecuted.  The county treasurer shall submit one-half of the 
        receipts to the commissioner and credit the balance to the 
        county general revenue fund except as provided in paragraphs 
        (b), (c), and (d).  In a county in a judicial district under 
        section 480.181, subdivision 1, paragraph (b), as added in Laws 
        1999, chapter 216, article 7, section 26, the share that would 
        otherwise go to the county under this paragraph must be 
        submitted to the state treasurer for deposit in the state 
        treasury and credited to the general fund. 
           (b) The commissioner must reimburse a county, from the game 
        and fish fund, for the cost of keeping prisoners prosecuted for 
        violations under this section if the county board, by 
        resolution, directs:  (1) the county treasurer to submit all 
        fines and forfeited bail to the commissioner; and (2) the county 
        auditor to certify and submit monthly itemized statements to the 
        commissioner.  
           (c) The county treasurer shall submit one-half of the 
        receipts collected under paragraph (a) from prosecutions of 
        violations of sections 84.81 to 84.91 or rules adopted 
        thereunder, and 169A.20, except receipts that are surcharges 
        imposed under section 357.021, subdivision 6, to the 
        commissioner and credit the balance to the county general fund.  
        The commissioner shall credit these receipts to the snowmobile 
        trails and enforcement account in the natural resources fund. 
           (d) The county treasurer shall indicate the amount of the 
        receipts that are surcharges imposed under section 357.021, 
        subdivision 6, and shall submit all of those receipts to the 
        state treasurer. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 2.  Minnesota Statutes 2000, section 179A.101, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COURT EMPLOYEE UNITS.] (a) The state court 
        administrator shall meet and negotiate with the exclusive 
        representative of each of the units specified in this section.  
        The units provided in this section are the only appropriate 
        units for court employees.  Court employees, unless otherwise 
        excluded, are included within the units which include the 
        classifications to which they are assigned for purposes of 
        compensation.  Initial assignment of classifications to 
        bargaining units shall be made by the state court administrator 
        by August 15, 1999 of the year preceding the year in which the 
        state assumes the cost of court administration in the judicial 
        district in which the bargaining unit is located.  An exclusive 
        representative may appeal the initial assignment decision of the 
        state court administrator by filing a petition with the 
        commissioner within 45 days of being certified as the exclusive 
        representative for a judicial district.  The units in this 
        subdivision are the appropriate units of court employees. 
           (b) The judicial district unit consists of clerical, 
        administrative, and technical employees of a judicial district 
        under section 480.181, subdivision 1, paragraph (b), or of two 
        or more of these districts that are represented by the same 
        employee organization or one or more subordinate bodies of the 
        same employee organization.  The judicial district unit includes 
        individuals, not otherwise excluded, whose work is typically 
        clerical or secretarial in nature, including nontechnical data 
        recording and retrieval and general office work, and 
        individuals, not otherwise excluded, whose work is not typically 
        manual and which requires specialized knowledge or skills 
        acquired through two-year academic programs or equivalent 
        experience or on-the-job training. 
           (c) The appellate courts unit consists of clerical, 
        administrative, and technical employees of the court of appeals 
        and clerical, administrative, and technical employees of the 
        supreme court.  The appellate courts unit includes individuals, 
        not otherwise excluded, whose work is typically clerical or 
        secretarial in nature, including nontechnical data recording and 
        retrieval and general office work, and individuals, not 
        otherwise excluded, whose work is not typically manual and which 
        requires specialized knowledge or skills acquired through 
        two-year academic programs or equivalent experience or 
        on-the-job training. 
           (d) The court employees professional employee unit consists 
        of professional employees, not otherwise excluded, that are 
        employed by the supreme court, the court of appeals, or a 
        judicial district under section 480.181, subdivision 1, 
        paragraph (b). 
           (e) The court employees court reporter unit consists of 
        court reporters not otherwise excluded who are employed by a 
        judicial district under section 480.181, subdivision 1, 
        paragraph (a). 
           (f) Notwithstanding any provision of this chapter or any 
        other law to the contrary, judges may appoint and remove court 
        reporters at their pleasure. 
           (g) Copies of collective bargaining agreements entered into 
        under this section must be submitted to the legislative 
        coordinating commission for the commission's information. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 3.  Minnesota Statutes 2000, section 179A.102, 
        subdivision 6, is amended to read: 
           Subd. 6.  [CONTRACT AND REPRESENTATION RESPONSIBILITIES.] 
        (a) Notwithstanding the provisions of section 179A.101, the 
        exclusive representatives of units of court employees certified 
        prior to the effective date of the judicial district coming 
        under section 480.181, subdivision 1, paragraph (b), remain 
        responsible for administration of their contracts and for other 
        contractual duties and have the right to dues and fair share fee 
        deduction and other contractual privileges and rights until a 
        contract is agreed upon with the state court administrator for a 
        new unit established under section 179A.101 or until June 30, 
        2001, whichever is earlier.  Exclusive representatives of court 
        employees certified after the effective date of this section in 
        the judicial district are immediately upon certification 
        responsible for bargaining on behalf of employees within the 
        unit.  They are also responsible for administering grievances 
        arising under previous contracts covering employees included 
        within the unit which remain unresolved on June 30, 2001, or 
        upon agreement with the state court administrator on a contract 
        for a new unit established under section 179A.101, whichever is 
        earlier.  Where the employer does not object, these 
        responsibilities may be varied by agreement between the outgoing 
        and incoming exclusive representatives.  All other rights and 
        duties of representation begin on July 1, 2001 of the year in 
        which the state assumes the funding of court administration in 
        the judicial district, except that exclusive representatives 
        certified after the effective date of this section shall 
        immediately, upon certification, have the right to all employer 
        information and all forms of access to employees within the 
        bargaining unit which would be permitted to the current contract 
        holder, including the rights in section 179A.07, subdivision 6.  
        This section does not affect an existing collective bargaining 
        contract.  Incoming exclusive representatives of court employees 
        from judicial districts that come under section 480.181, 
        subdivision 1, paragraph (b), are immediately, upon 
        certification, responsible for bargaining on behalf of all 
        previously unrepresented employees assigned to their units.  All 
        other rights and duties of exclusive representatives begin on 
        July 1, 2001 of the year in which the state assumes the funding 
        of court administration in the judicial district. 
           (b) Nothing in this act or Laws 1999, chapter 216, article 
        7, sections 3 to 15, prevents an exclusive representative 
        certified after the effective date of sections 3 to 15 dates of 
        those provisions from assessing fair share or dues deductions 
        immediately upon certification for employees in a unit 
        established under section 179A.101 if the employees were 
        unrepresented for collective bargaining purposes before that 
        certification. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 4.  Minnesota Statutes 2000, section 179A.103, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTRACTS.] Contracts for the period 
        commencing July 1, 2000, of the year in which the state assumes 
        the cost of court administration in the judicial district for 
        the judicial district court employees of judicial districts that 
        are under section 480.181, subdivision 1, paragraph (b), must be 
        negotiated with the state court administrator.  Negotiations for 
        those contracts may begin any time after July 1, 1999 of the 
        year before the state assumes the cost, and may be initiated by 
        either party notifying the other of the desire to begin the 
        negotiating process.  Negotiations are subject to this chapter. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 5.  Minnesota Statutes 2000, section 273.1398, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [AID OFFSET FOR COURT COSTS.] (a) By July 15, 
        1999 of the year preceding the year in which the state assumes 
        the cost of court administration in the judicial district as 
        specified under section 480.183, 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 in the 
        judicial districts specified under Laws 1999, chapter 216, 
        article 7, section 480.183, subdivision 1, during the succeeding 
        fiscal year beginning July 1, 2000,. 
           (b) The amount certified in paragraph (a) shall be equal to 
        the following: 
           (1) 103 percent of the required court administration 
        expenditures as defined under section 480.183, subdivision 3, 
        for calendar year 2003, as determined under subdivision 4b, 
        paragraph (a); plus 
           (2) an adjustment for any cumulative percentage increase in 
        salary expenditures as defined under section 480.183, 
        subdivision 2, in excess of a maintenance of effort increase of 
        six percent; less 
           (3) an amount equal to the county's share of transferred 
        fines collected by the district courts in the county during the 
        calendar year 1998 preceding certification.  
           The court and the county may, if both parties agree, 
        negotiate and certify an amount higher than the amount 
        calculated under this paragraph. 
           (c) For purposes of this subdivision, the adjustment in 
        paragraph (b), clause (2), shall be equal to: 
           (1) the sum of the court administration expenditures as 
        defined under section 480.183, subdivision 3, required under 
        subdivision 4b, paragraph (a), plus the temporary aid payment 
        under subdivision 4c; multiplied by 
           (2) the difference between (i) the cumulative percentage 
        increase in actual and anticipated salary settlements for court 
        employees from July 1, 2001, until the date of the court 
        transfer and (ii) the percentage specified in subdivision 4b, 
        paragraph (a).  
           (b) (d) Payments to a county under subdivision 2 or section 
        273.166 for the calendar year 2000 in which the state assumes 
        the cost of court administration as defined under section 
        480.183, subdivision 3, in the judicial district 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) (e) Payments to a county under subdivision 2 or section 
        273.166 for the calendar year 2001 after the calendar year in 
        which the state assumes the cost of court administration as 
        defined under section 480.183, subdivision 3, in the judicial 
        district 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), provided that this 
        amount must be increased or decreased by an amount equal to the 
        positive or negative difference between the amount of fee and 
        fine revenue certified under paragraph (b), clause (3), and the 
        actual amount of fee and fine revenue of the county for the 
        calendar year when certification takes place. 
           (d) (f) 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. 
           (g) Payments to a county under subdivision 2 or section 
        273.166, for the cost of mandated services, as defined in 
        section 480.183, subdivision 4, in the judicial district, must 
        be permanently reduced in 2002 by an amount equal to the cost to 
        the state for assumption of mandated court services as defined 
        in section 480.183, subdivision 4.  The supreme court shall 
        determine the amount for each county and certify it to the 
        commissioner of revenue by July 15, 2001. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 6.  Minnesota Statutes 2000, section 273.1398, is 
        amended by adding a subdivision to read: 
           Subd. 4b.  [COURT EXPENDITURES; MAINTENANCE OF EFFORT.] (a) 
        Until the costs of court administration as defined under section 
        480.183, subdivision 3, in a county have been transferred to the 
        state, each county in a judicial district transferring court 
        administration costs to state funding after July 1, 2001, shall 
        budget for the funding of these costs an amount at least equal 
        to the certified budget amount for calendar year 2001, increased 
        by six percent for each year from 2001 to 2003 and by eight 
        percent from 2004 to the year of the transfer.  The county shall 
        budget, fund, and authorize expenditures not less than the 
        amount calculated under this paragraph plus the temporary aid 
        amount under subdivision 4c for maintenance of effort of 
        administrative costs. 
           (b) By July 15, 2001, the court shall certify to each 
        county in the judicial district its cost of court administration 
        as defined under section 480.183, subdivision 3, based on 2001 
        budgets.  In making that determination, the court shall exclude 
        the budget costs of the county for the following categories: 
           (1) rent; 
           (2) examiner of titles; 
           (3) civil court appointed attorneys for civil matters; 
           (4) hospitalization costs; and 
           (5) cost of maintaining vital statistics. 
           The amount of funding provided by a county for courts that 
        is increased by the maintenance of effort requirement may not be 
        used by a county to pay the costs described in clauses (1) to 
        (5). 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 7.  Minnesota Statutes 2000, section 273.1398, is 
        amended by adding a subdivision to read: 
           Subd. 4c.  [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 
        calendar years 2004 and 2005, each county in a judicial district 
        that has not been transferred to the state by January 1 of that 
        year shall receive additional homestead and agricultural credit 
        aid.  This amount is in addition to the amount calculated under 
        subdivision 2 and must not be included in the definition of 
        homestead and agricultural credit base under subdivision 1, 
        paragraph (j).  The amount of additional aid is equal to the 
        difference between (1) the amount budgeted for court 
        administration costs in 2001 as determined under subdivision 4b, 
        paragraph (c), multiplied by the maintenance of effort percent 
        for the calendar year as determined under subdivision 4b, 
        paragraph (d), and (2) the amount calculated under subdivision 
        4b, paragraph (a), for calendar year 2003.  This additional aid 
        must be used only to fund court administration expenditures as 
        defined in section 480.183, subdivision 3.  This amount must be 
        added to the state court's base budget in the year when the 
        court in that judicial district in which the county is located 
        is transferred to the state. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment.  
           Sec. 8.  Minnesota Statutes 2000, section 273.1398, is 
        amended by adding a subdivision to read: 
           Subd. 4d.  [AID OFFSET FOR OUT-OF-HOME PLACEMENT 
        COSTS.] For aid payable in 2003, each county's aid under 
        subdivision 2 shall be permanently reduced by an amount equal to 
        the county's 2003 reimbursement for nonfederal expenditures for 
        out-of-home placements, as provided in section 245.775, provided 
        that payments will be made under section 477A.0123 in calendar 
        year 2003.  The counties shall provide all information requested 
        by the commissioner of human services necessary to allow the 
        commissioner to certify the previous three years' average 
        nonfederal costs to the commissioner of revenue by July 15, 
        2003.  The aid reduction under this subdivision must be made 
        prior to any aid reductions for the state takeover of courts 
        contained in this article. 
           [EFFECTIVE DATE.] This section is effective the day after 
        final enactment, for aids payable beginning in 2003. 
           Sec. 9.  Minnesota Statutes 2000, section 299D.03, 
        subdivision 5, is amended to read: 
           Subd. 5.  [FINES AND FORFEITED BAIL MONEY.] (a) All fines 
        and forfeited bail money, from traffic and motor vehicle law 
        violations, collected from persons apprehended or arrested by 
        officers of the state patrol, shall be paid by the person or 
        officer collecting the fines, forfeited bail money or 
        installments thereof, on or before the tenth day after the last 
        day of the month in which these moneys were collected, to the 
        county treasurer of the county where the violation occurred.  
        Three-eighths of these receipts shall be credited to the general 
        revenue fund of the county, except that in a county in a 
        judicial district under section 480.181, subdivision 1, 
        paragraph (b), as added in Laws 1999, chapter 216, article 7, 
        section 26, this three-eighths share must be transmitted to the 
        state treasurer for deposit in the state treasury and credited 
        to the general fund.  The other five-eighths of these receipts 
        shall be transmitted by that officer to the state treasurer 
        and shall be credited as follows: 
           (1) In the fiscal year ending June 30, 1991, the first 
        $275,000 in money received by the state treasurer after June 4, 
        1991, must be credited to the transportation services fund, and 
        the remainder in the fiscal year credited to the trunk highway 
        fund. 
           (2) In fiscal year 1992, the first $215,000 in money 
        received by the state treasurer in the fiscal year must be 
        credited to the transportation services fund, and the remainder 
        credited to the trunk highway fund. 
           (3) In fiscal year 1993 and subsequent years, the entire 
        amount received by the state treasurer must be credited to the 
        trunk highway fund.  If, however, the violation occurs within a 
        municipality and the city attorney prosecutes the offense, and a 
        plea of not guilty is entered, one-third of the receipts shall 
        be credited to the general revenue fund of the county, one-third 
        of the receipts shall be paid to the municipality prosecuting 
        the offense, and one-third shall be transmitted to the state 
        treasurer as provided in this subdivision.  All costs of 
        participation in a nationwide police communication system 
        chargeable to the state of Minnesota shall be paid from 
        appropriations for that purpose. 
           (b) Notwithstanding any other provisions of law, all fines 
        and forfeited bail money from violations of statutes governing 
        the maximum weight of motor vehicles, collected from persons 
        apprehended or arrested by employees of the state of Minnesota, 
        by means of stationary or portable scales operated by these 
        employees, shall be paid by the person or officer collecting the 
        fines or forfeited bail money, on or before the tenth day after 
        the last day of the month in which the collections were made, to 
        the county treasurer of the county where the violation 
        occurred.  Five-eighths of these receipts shall be transmitted 
        by that officer to the state treasurer and shall be credited to 
        the highway user tax distribution fund.  Three-eighths of these 
        receipts shall be credited to the general revenue fund of the 
        county, except that in a county in a judicial district under 
        section 480.181, subdivision 1, paragraph (b), as added in Laws 
        1999, chapter 216, article 7, section 26, this three-eighths 
        share must be transmitted to the state treasurer for deposit in 
        the state treasury and credited to the general fund. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 10.  Minnesota Statutes 2000, section 357.021, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [TRANSMITTAL OF FEES TO STATE TREASURER.] (a) 
        Every person, including the state of Minnesota and all bodies 
        politic and corporate, who shall transact any business in the 
        district court, shall pay to the court administrator of said 
        court the sundry fees prescribed in subdivision 2.  Except as 
        provided in paragraph (d), the court administrator shall 
        transmit the fees monthly to the state treasurer for deposit in 
        the state treasury and credit to the general fund.  
           (b) In a county which has a screener-collector position, 
        fees paid by a county pursuant to this subdivision shall be 
        transmitted monthly to the county treasurer, who shall apply the 
        fees first to reimburse the county for the amount of the salary 
        paid for the screener-collector position.  The balance of the 
        fees collected shall then be forwarded to the state treasurer 
        for deposit in the state treasury and credited to the general 
        fund.  In a county in a judicial district under section 480.181, 
        subdivision 1, paragraph (b), as added in Laws 1999, chapter 
        216, article 7, section 26, which has a screener-collector 
        position, the fees paid by a county shall be transmitted monthly 
        to the state treasurer for deposit in the state treasury and 
        credited to the general fund.  A screener-collector position for 
        purposes of this paragraph is an employee whose function is to 
        increase the collection of fines and to review the incomes of 
        potential clients of the public defender, in order to verify 
        eligibility for that service. 
           (c) No fee is required under this section from the public 
        authority or the party the public authority represents in an 
        action for: 
           (1) child support enforcement or modification, medical 
        assistance enforcement, or establishment of parentage in the 
        district court, or in a proceeding under section 484.702; 
           (2) civil commitment under chapter 253B; 
           (3) the appointment of a public conservator or public 
        guardian or any other action under chapters 252A and 525; 
           (4) wrongfully obtaining public assistance under section 
        256.98 or 256D.07, or recovery of overpayments of public 
        assistance; 
           (5) court relief under chapter 260; 
           (6) forfeiture of property under sections 169A.63 and 
        609.531 to 609.5317; 
           (7) recovery of amounts issued by political subdivisions or 
        public institutions under sections 246.52, 252.27, 256.045, 
        256.25, 256.87, 256B.042, 256B.14, 256B.15, 256B.37, 260B.331, 
        and 260C.331, or other sections referring to other forms of 
        public assistance; 
           (8) restitution under section 611A.04; or 
           (9) actions seeking monetary relief in favor of the state 
        pursuant to section 16D.14, subdivision 5. 
           (d) The fees collected for child support modifications 
        under subdivision 2, clause (13), must be transmitted to the 
        county treasurer for deposit in the county general fund.  The 
        fees must be used by the county to pay for child support 
        enforcement efforts by county attorneys. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 11.  [477A.0123] [REIMBURSEMENT OF COUNTY FOR CERTAIN 
        OUT-OF-HOME PLACEMENT.] 
           Subdivision 1.  [AID PAYMENTS.] (a) In calendar year 2003 
        and thereafter, the commissioner of revenue shall reimburse each 
        county for a portion of the nonfederal share of the cost of 
        out-of-home placement provided the commissioner of human 
        services, in consultation with the commissioner of corrections, 
        certifies to the commissioner of revenue that accurate data is 
        available to make the aid determination under this section.  The 
        amount of reimbursement is a percent of the county's average 
        nonfederal share of the cost for out-of-home placement for the 
        most recent three calendar years for which data is available.  
        The commissioner shall pay the aid under the schedule used for 
        local government aid payments under section 477A.015. 
           (b) For aids payable in calendar year 2003, the percent of 
        reimbursement in paragraph (a) shall be equal to the maximum 
        percentage possible, up to 30 percent, that does not cause the 
        payment to any county in the seven county metropolitan area to 
        exceed the difference between the amount of aid it is scheduled 
        to receive in calendar year 2003 under section 273.1398, prior 
        to the offset under section 273.1398, subdivision 4d, and any 
        aid offset under section 273.1398, subdivision 4a, that is 
        scheduled to occur after July 1, 2003.  For aids payable in 2004 
        and thereafter, the percent of reimbursement under paragraph (a) 
        shall be equal to the percent of reimbursement determined for 
        calendar year 2003, adjusted so that the total payments under 
        this section do not exceed the appropriation under section 
        477A.03, subdivision 2, paragraph (e). 
           (c) For purposes of this section, "out-of-home placement" 
        means the placement of a child in a child caring institution or 
        shelter licensed under Minnesota Rules, parts 9545.0905 to 
        9545.1125, in a group home licensed under Minnesota Rules, parts 
        9545.1400 to 9545.1480, in family foster care or group family 
        foster care licensed under Minnesota Rules, parts 9545.0010 to 
        9545.0260, or a correctional facility pursuant to a court order 
        under which a county social services agency or a county 
        correctional agency has been assigned responsibility for the 
        placement. 
           Subd. 2.  [DETERMINATION OF NONFEDERAL SHARE OF COSTS.] (a) 
        By January 1, 2002, each county shall report the following 
        information to the commissioners of human services and 
        corrections, the separate amounts paid out of its social service 
        agency budget and its corrections budget for out-of-home 
        placement in calendar years 1998, 1999, and 2000, along with the 
        number of case days associated with the expenditures from each 
        budget.  By March 15, 2002, the commissioner of human services, 
        in consultation with the commissioner of corrections, shall 
        certify to the commissioner of revenue and to the legislative 
        committees responsible for local government aids and out-of-home 
        placement funding, whether the data reported under this 
        subdivision accurately reflects total expenditures by counties 
        for out-of-home placement costs. 
           (b) By January 1 of calendar year 2004 and thereafter, each 
        county shall report to the commissioners of human services and 
        corrections the separate amounts paid out of its social service 
        agency budget and its corrections budget for out-of-home 
        placement in the calendar years two years before the current 
        calendar year along with the number of case days associated with 
        the expenditures from each budget. 
           (c) Until either the commissioner of human services or 
        corrections develops another mechanism for collecting and 
        verifying data on out-of-home placements, and the legislature 
        authorizes the use of that data, the data collected under this 
        subdivision shall be used to calculate payments under 
        subdivision 1.  The commissioner of human services shall certify 
        the information to the commissioner of revenue by July 1 of the 
        year prior to the aid payment. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2003 and thereafter except subdivision 2 is effective 
        the day after final enactment. 
           Sec. 12.  Minnesota Statutes 2000, 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, 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 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 2003 under section 477A.06.  For aids 
        payable in 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. 
           (e) Reimbursements made to counties under section 477A.0123 
        in calendar year 2004 and thereafter are limited to an amount 
        equal to the maximum allowed appropriation under this section in 
        the previous year, multiplied by a percent to be established by 
        law. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in calendar year 2003 and thereafter. 
           Sec. 13.  Minnesota Statutes 2000, section 480.181, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STATE EMPLOYEES; COMPENSATION.] (a) 
        District court referees, judicial officers, court reporters, law 
        clerks, district administration staff, other than district 
        administration staff in the second and fourth judicial 
        districts, guardian ad litem program coordinators and 
        staff, staff court interpreters in the second judicial district, 
        court psychological services staff in the fourth judicial 
        district, and other court employees under paragraph (b), are 
        state employees and are governed by the judicial branch 
        personnel rules adopted by the supreme court.  The supreme 
        court, in consultation with the conference of chief judges, 
        shall establish the salary range of these employees under the 
        judicial branch personnel rules.  In establishing the salary 
        ranges, the supreme court shall consider differences in the cost 
        of living in different areas of the state. 
           (b) The court administrator and employees of the court 
        administrator who are in the fifth, seventh, eighth, or ninth 
        judicial district are state employees.  The court administrator 
        and employees of the court administrator in the remaining 
        judicial districts become state employees as follows: 
           (1) effective July 1, 2003, for the second and fourth 
        judicial districts; 
           (2) effective July 1, 2004, for the first and third 
        judicial districts; and 
           (3) effective July 1, 2005, for the sixth and tenth 
        judicial districts. 
           [EFFECTIVE DATE.] The amendment to paragraph (a) for the 
        second district is effective July 1, 2001, and for the fourth 
        judicial district is effective July 1, 2003. 
           Sec. 14.  [480.1811] [POST-RETIREMENT BENEFIT COSTS.] 
           Where court administration, guardian ad litem, or 
        interpreter employees elect to retain county insurance benefits 
        under section 480.181 after July 1, 2001, and the county 
        provides those employees post-retirement insurance benefits 
        prior to July 1, 2001, the county shall pay the post-retirement 
        cost of those benefits. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 15.  [480.183] [JUDICIAL DISTRICTS; SCHEDULED DATES OF 
        STATE TRANSFER; DEFINITION OF SERVICES.] 
           Subdivision 1.  [DATE OF STATE TRANSFER.] The court 
        administration expenditures as defined in this section for the 
        remaining judicial districts shall be transferred to the state 
        according to the following schedule: 
           (1) effective July 1, 2003, the second and fourth judicial 
        districts; 
           (2) effective July 1, 2004, the first and third judicial 
        districts; and 
           (3) effective July 1, 2005, the sixth and tenth judicial 
        districts. 
           Subd. 2.  [DEFINITION; SALARY EXPENDITURES.] "Salary 
        expenditures" means the salary of court administration 
        employees, including salaries, related fringe benefits, and 
        insurance, granted to court and other county employees in 
        collective bargaining or county pay plans. 
           Subd. 3.  [DEFINITION; COURT ADMINISTRATION 
        EXPENDITURES.] "Court administration expenditures" means the 
        total expenditures of (1) salary expenditures as defined under 
        subdivision 2 and (2) other related administrative operating 
        expenditures. 
           Subd. 4.  [DEFINITION; MANDATED COURT SERVICES.] "Mandated 
        court services" means services for: 
           (1) guardian ad litem; 
           (2) interpreter; 
           (3) Minnesota Rules, parts 9525.0900 to 9525.1020 (rule 
        20); 
           (4) civil commitment examination, not including 
        hospitalization or treatment costs, for mental commitments and 
        related proceedings under chapter 253B; and 
           (5) in forma pauperis costs. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 16.  [484.77] [FACILITIES.] 
           The county board in each county shall provide suitable 
        facilities for court purposes at the county seat, or at other 
        locations agreed upon by the district court and the county.  The 
        county shall also be responsible for the costs of renting, 
        maintaining, operating, remodeling, insuring, and renovating 
        those facilities occupied by the court.  The county board and 
        the district court must mutually agree upon relocation, 
        renovation, new construction, and remodeling decisions related 
        to court facility needs.  The state court administrator shall 
        convene court and county representatives who shall develop 
        written model guidelines for facilities that may be adopted in 
        each county. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 17.  Minnesota Statutes 2000, section 487.33, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ALLOCATION.] The court administrator shall 
        provide the county treasurer with the name of the municipality 
        or other subdivision of government where the offense was 
        committed which employed or provided by contract the arresting 
        or apprehending officer and the name of the municipality or 
        other subdivision of government which employed the prosecuting 
        attorney or otherwise provided for prosecution of the offense 
        for each fine or penalty and the total amount of fines or 
        penalties collected for each municipality or other subdivision 
        of government.  On or before the last day of each month, the 
        county treasurer shall pay over to the treasurer of each 
        municipality or subdivision of government within the county all 
        fines or penalties for parking violations for which complaints 
        and warrants have not been issued and one-third of all fines or 
        penalties collected during the previous month for offenses 
        committed within the municipality or subdivision of government 
        from persons arrested or issued citations by officers employed 
        by the municipality or subdivision or provided by the 
        municipality or subdivision by contract.  An additional 
        one-third of all fines or penalties shall be paid to the 
        municipality or subdivision of government providing prosecution 
        of offenses of the type for which the fine or penalty is 
        collected occurring within the municipality or subdivision, 
        imposed for violations of state statute or of an ordinance, 
        charter provision, rule or regulation of a city whether or not a 
        guilty plea is entered or bail is forfeited.  Except as provided 
        in section 299D.03, subdivision 5, or as otherwise provided by 
        law, all other fines and forfeitures and all fees and statutory 
        court costs collected by the court administrator shall be paid 
        to the county treasurer of the county in which the funds were 
        collected who shall dispense them as provided by law.  In a 
        county in a judicial district under section 480.181, subdivision 
        1, paragraph (b), as added in Laws 1999, chapter 216, article 7, 
        section 26, all other fines, forfeitures, fees, and statutory 
        court costs must be paid to the state treasurer for deposit in 
        the state treasury and credited to the general fund. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 18.  Minnesota Statutes 2000, section 488A.03, is 
        amended by adding a subdivision to read: 
           Subd. 14.  [REVENUES TO GENERAL FUND.] In a judicial 
        district under section 480.181, subdivision 1, paragraph (b), 
        the county's share of all fines, forfeitures, fees, and 
        statutory court costs must be paid to the state treasurer for 
        deposit in the state treasury and credited to the general fund. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 19.  Minnesota Statutes 2000, section 488A.20, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [REVENUES TO GENERAL FUND.] In a judicial 
        district under section 480.181, subdivision 1, paragraph (b), 
        the county's share of all fines, forfeitures, fees, and 
        statutory court costs must be paid to the state treasurer for 
        deposit in the state treasury and credited to the general fund. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 20.  Minnesota Statutes 2000, section 574.34, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL.] Fines and forfeitures not 
        specially granted or appropriated by law shall be paid into the 
        treasury of the county where they are incurred, except in a 
        county in a judicial district under section 480.181, subdivision 
        1, paragraph (b), as added in Laws 1999, chapter 216, article 7, 
        section 26, the fines and forfeitures must be deposited in the 
        state treasury and credited to the general fund. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 21.  [TRANSITIONAL PROVISIONS.] 
           Subdivision 1.  [TRANSFER OF PROPERTY.] The title to 
        personal property that is used by employees being transferred to 
        state employment under this article in the scope of their 
        employment is transferred to the state when they become state 
        employees.  
           Subd. 2.  [RULES.] The supreme court, in consultation with 
        the conference of chief judges, may adopt rules to implement 
        this article.  
           Subd. 3.  [BUDGETS.] Notwithstanding any law to the 
        contrary, the fiscal year budgets for the year in which the 
        state assumes the cost of court administration in the judicial 
        district for the court administrators' offices being transferred 
        to state employment under this article, including the number of 
        complement positions and salaries, must be submitted by the 
        court administrators to the supreme court.  The budgets must 
        include the current levels of funding and positions at the time 
        of submission as well as any requests for increases in funding 
        and positions. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003, 
        in the second and fourth districts; July 1, 2004, in the first 
        and third districts; and July 1, 2005, in the sixth and tenth 
        districts. 
           Sec. 22.  [APPROPRIATION.] 
           (a) The supreme court general fund appropriation base is 
        increased by $39,240,000 in fiscal year 2004 and by an 
        additional $17,316,000 in fiscal year 2005.  In fiscal years 
        2006 and 2007 the supreme court may request additional base 
        adjustments to reflect the transfer of the remaining judicial 
        districts. 
           (b) $8,701,253 is appropriated to the supreme court from 
        the general fund in each of fiscal years 2002 and 2003 to be 
        used to pay the costs of mandated court services assumed by the 
        state under Minnesota Statutes, section 480.183, subdivision 1. 
           (c) For each of fiscal years 2004 and 2005, $1,700,000 is 
        appropriated from the general fund to the supreme court to fund 
        court takeover equity adjustments.  These amounts must be added 
        to the court base budget in subsequent fiscal years. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 

                                   ARTICLE 6 
                                 MINERALS TAXES 
           Section 1.  Minnesota Statutes 2000, section 116J.424, is 
        amended to read: 
           116J.424 [IRRRB CONTRIBUTION.] 
           The commissioner of the iron range resources and 
        rehabilitation board with approval of the board shall provide an 
        equal match for any loan or equity investment made for a 
        facility located in the tax relief area defined in section 
        273.134, paragraph (b), by the Minnesota minerals 21st century 
        fund created by section 116J.423.  The match may be in the form 
        of a loan or equity investment, notwithstanding whether the fund 
        makes a loan or equity investment.  The state shall not acquire 
        an equity interest because of an equity investment or loan by 
        the board and the board at its sole discretion shall decide what 
        interest it acquires in a project.  The commissioner of trade 
        and economic development may require a commitment from the board 
        to make the match prior to disbursing money from the fund. 
           Sec. 2.  Minnesota Statutes 2000, section 126C.21, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TACONITE DEDUCTIONS.] (1) Notwithstanding any 
        provisions of any other law to the contrary, the adjusted net 
        tax capacity used in calculating general education aid may 
        include only that property that is currently taxable in the 
        district.  
           (2) For districts that received payments under sections 
        298.018; 298.24 to 298.28; 298.34 to 298.39; 298.391 to 298.396; 
        and 298.405;, or any law imposing a tax upon severed mineral 
        values, or recognized revenue pursuant to section 477A.15; the 
        general education aid must be reduced in the final adjustment 
        payment by the difference between the dollar amount of the 
        payments received pursuant to those sections, or revenue 
        recognized pursuant to section 477A.15 in the fiscal year to 
        which the final adjustment is attributable and the amount that 
        was calculated, pursuant to section 126C.48, subdivision 8, as a 
        reduction of the levy attributable to the fiscal year to which 
        the final adjustment is attributable.  If the final adjustment 
        of a district's general education aid for a fiscal year is a 
        negative amount because of this clause, the next fiscal year's 
        general education aid to that district must be reduced by this 
        negative amount in the following manner:  there must be withheld 
        from each scheduled general education aid payment due the 
        district in such fiscal year, 15 percent of the total negative 
        amount, until the total negative amount has been withheld.  The 
        amount reduced from general education aid pursuant to this 
        clause must be recognized as revenue in the fiscal year to which 
        the final adjustment payment is attributable. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in the 2002-2003 school year. 
           Sec. 3.  Minnesota Statutes 2000, section 126C.48, 
        subdivision 8, is amended to read: 
           Subd. 8.  [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 
        Reductions in levies pursuant to sections 126C.48, subdivision 
        1, and 273.138, must be made prior to the reductions in clause 
        (2). 
           (2) Notwithstanding any other law to the contrary, 
        districts which received payments pursuant to sections 298.018; 
        298.24 to 298.28, except an amount distributed under section 
        298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 
        298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 
        upon severed mineral values, or recognized revenue pursuant to 
        section 477A.15; must not include a portion of these aids in 
        their permissible levies pursuant to those sections, but instead 
        must reduce the permissible levies authorized by this chapter 
        and chapters 120B, 122A, 123A, 123B, 124A, 124D, 125A, and 127A 
        by the greater of the following: 
           (a) an amount equal to 50 percent of the total dollar 
        amount of the payments received pursuant to those sections or 
        revenue recognized pursuant to section 477A.15 in the previous 
        fiscal year; or 
           (b) an amount equal to the total dollar amount of the 
        payments received pursuant to those sections or revenue 
        recognized pursuant to section 477A.15 in the previous fiscal 
        year less the product of the same dollar amount of payments or 
        revenue times five percent. 
           (3) No reduction pursuant to this subdivision shall reduce 
        the levy made by the district pursuant to section 126C.13, to an 
        amount less than the amount raised by a levy of a net tax rate 
        of 6.82 percent times the adjusted net tax capacity for taxes 
        payable in 1990 and thereafter of that district for the 
        preceding year as determined by the commissioner.  The amount of 
        any increased levy authorized by referendum pursuant to section 
        126C.17, subdivision 9, shall not be reduced pursuant to this 
        subdivision.  The amount of any levy authorized by section 
        126C.43, to make payments for bonds issued and for interest 
        thereon, shall not be reduced pursuant to this subdivision.  
           (4) Before computing the reduction pursuant to this 
        subdivision of the health and safety levy authorized by sections 
        123B.57 and 126C.40, subdivision 5, the commissioner shall 
        ascertain from each affected school district the amount it 
        proposes to levy under each section or subdivision.  The 
        reduction shall be computed on the basis of the amount so 
        ascertained. 
           (5) Notwithstanding any law to the contrary, any amounts 
        received by districts in any fiscal year pursuant to sections 
        298.018; 298.24 to 298.28; 298.34 to 298.39; 298.391 to 298.396; 
        298.405; or any law imposing a tax on severed mineral values; 
        and not deducted from general education aid pursuant to section 
        126C.21, subdivision 4, clause (2), and not applied to reduce 
        levies pursuant to this subdivision shall be paid by the 
        district to the St. Louis county auditor in the following amount 
        by March 15 of each year, the amount required to be subtracted 
        from the previous fiscal year's general education aid pursuant 
        to section 126C.21, subdivision 4, which is in excess of the 
        general education aid earned for that fiscal year.  The county 
        auditor shall deposit any amounts received pursuant to this 
        clause in the St. Louis county treasury for purposes of paying 
        the taconite homestead credit as provided in section 273.135. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2001 for taxes payable in 2002. 
           Sec. 4.  Minnesota Statutes 2000, section 273.134, is 
        amended to read: 
           273.134 [TACONITE AND IRON ORE AREAS; TAX RELIEF AREA; 
        DEFINITIONS.] 
           (a) For purposes of this section and section 273.135, 
        "municipality" means any city, however organized, or town, and 
        the applicable assessment date is the date as of which property 
        is listed and assessed for the tax in question. 
           For the purposes of section 273.135, "tax relief area" 
        means the geographic area contained, within the boundaries of a 
        school district on January 2, 2000, which contains a 
        municipality which meets the following qualifications: 
           (1) it is a municipality in which the assessed valuation of 
        unmined iron ore on May 1, 1941, was not less than 40 percent of 
        the assessed valuation of all real property; or 
           (2) it is a municipality in which, on January 1, 1977 or 
        the applicable assessment date, there is a taconite 
        concentrating plant or where taconite is mined or quarried or 
        where there is located an electric generating plant which 
        qualifies as a taconite facility. 
           For purposes of this paragraph, a "tax relief area" does 
        not include a school district whose boundaries are more than 20 
        miles from a taconite mine or plant or in which the assessed 
        valuation of unmined iron ore on May 1, 1941, was less than 40 
        percent of the assessed valuation of all real property. 
           (b) For purposes of section 273.1391, subdivision 2, 
        paragraph (c), and chapter 298, "tax relief area" means the 
        geographic area contained within the boundaries of a school 
        district which contains a municipality that meets the following 
        qualifications: 
           (1) it is a municipality in which the assessed valuation of 
        unmined iron ore on May 1, 1941, was not less than 40 percent of 
        the assessed valuation of all real property; or 
           (2) it is a municipality in which, on January 1, 1977, or 
        the applicable assessment date, there is a taconite 
        concentrating plant or where taconite is mined or quarried or 
        where there is located an electric generating plant which 
        qualifies as a taconite facility. 
           [EFFECTIVE DATE.] This section is effective for taxes and 
        aids payable and expenditures authorized in 2002 and thereafter. 
           Sec. 5.  Minnesota Statutes 2000, section 273.135, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The property tax to be paid in respect to 
        property taxable within a tax relief area as defined in section 
        273.134, paragraph (a), on homestead property, as otherwise 
        determined by law and regardless of the market value of the 
        property, for all purposes shall be reduced in the amount 
        prescribed by subdivision 2, subject to the limitations 
        contained therein. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 6.  Minnesota Statutes 2000, section 273.135, 
        subdivision 2, is amended to read: 
           Subd. 2.  The amount of the reduction authorized by 
        subdivision 1 shall be: 
           (a) In the case of property located within a tax relief 
        area as defined under section 273.134, paragraph (a), that is 
        within the boundaries of a municipality which meets the 
        qualifications prescribed in section 273.134, paragraph (a), 66 
        percent of the tax, provided that the reduction shall not exceed 
        the maximum amounts specified in clause paragraph (c).  
           (b) In the case of property located within the boundaries 
        of a school district which qualifies as a tax relief area under 
        section 273.134, paragraph (a), but which is outside the 
        boundaries of a municipality which meets the qualifications 
        prescribed in section 273.134, paragraph (a), 57 percent of the 
        tax, provided that the reduction shall not exceed the maximum 
        amounts specified in clause paragraph (c).  
           (c) The maximum reduction of the tax is $315.10 on property 
        described in clause paragraph (a) and $289.80 on property 
        described in clause paragraph (b). 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 7.  Minnesota Statutes 2000, section 273.136, 
        subdivision 2, is amended to read: 
           Subd. 2.  The commissioner of revenue shall determine, not 
        later than April 1 of each year, the amount of reduction 
        resulting from section 273.135 in each county containing a tax 
        relief area as defined by section 273.134, paragraph (b), basing 
        determinations on a review of abstracts of tax lists submitted 
        by the county auditors pursuant to section 275.29.  The 
        commissioner may make changes in the abstracts of tax lists as 
        deemed necessary.  The commissioner of revenue, after such 
        review, shall submit to the St. Louis county auditor, on or 
        before April 15, the amount of the first half payment payable 
        hereunder and on or before September 15 the amount of the second 
        half payment.  
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 8.  Minnesota Statutes 2000, section 273.1391, 
        subdivision 2, is amended to read: 
           Subd. 2.  The amount of the reduction authorized by 
        subdivision 1 shall be: 
           (a) In the case of property located within a school 
        district which does not meet the qualifications of section 
        273.134 as a tax relief area, but which is located in a county 
        with a population of less than 100,000 in which taconite is 
        mined or quarried and wherein a school district is located which 
        does meet the qualifications of a tax relief area, and provided 
        that at least 90 percent of the area of the school district 
        which does not meet the qualifications of section 273.134 lies 
        within such county, 57 percent of the tax on qualified property 
        located in the school district that does not meet the 
        qualifications of section 273.134, provided that the amount of 
        said reduction shall not exceed the maximum amounts specified in 
        clause (c) paragraph (d).  The reduction provided by this clause 
        shall only be applicable to property located within the 
        boundaries of the county described therein.  
           (b) In the case of property located within a school 
        district which does not meet the qualifications of section 
        273.134 as a tax relief area, but which is located in a school 
        district in a county containing a city of the first class and a 
        qualifying municipality, but not in a school district containing 
        a city of the first class or adjacent to a school district 
        containing a city of the first class unless the school district 
        so adjacent contains a qualifying municipality, 57 percent of 
        the tax, but not to exceed the maximums specified in clause 
        (c) paragraph (d). 
           (c) In the case of property located within the boundaries 
        of a municipality that meets the qualifications in section 
        273.134, paragraph (b), but not the qualifications in section 
        273.134, paragraph (a), 66 percent of the tax, provided that the 
        reduction shall not exceed $315.10.  In the case of property 
        located within the boundaries of a school district which 
        qualifies as a tax relief area under section 273.134, paragraph 
        (b), but does not qualify as a tax relief area under section 
        273.134, paragraph (a), but which is outside the boundaries of a 
        municipality which meets the qualifications of the preceding 
        sentence, 57 percent of the tax, provided that the reduction 
        shall not exceed the maximum amounts specified in paragraph (d). 
           (d) Except as otherwise provided in this section, the 
        maximum reduction of the tax is $289.80.  
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 9.  Minnesota Statutes 2000, section 273.1391, 
        subdivision 3, is amended to read: 
           Subd. 3.  Not later than December 1, each county auditor 
        having jurisdiction over one or more tax relief areas defined in 
        subdivision 2 shall certify to the commissioner of revenue an 
        estimate of the total amount of the reduction, determined under 
        subdivision 2, in taxes payable the next succeeding year with 
        respect to all tax relief areas in the auditor's county.  The 
        commissioner shall make payments to the county by May 15 and 
        October 15 annually at the times provided in section 477A.015.  
        The county treasurer shall distribute as part of the May and 
        October settlements the funds received from the commissioner. 
           [EFFECTIVE DATE.] This section is effective for payments in 
        2002 and thereafter. 
           Sec. 10.  Minnesota Statutes 2000, section 276A.01, 
        subdivision 2, is amended to read: 
           Subd. 2.  [AREA.] "Area" means the territory included 
        within all tax relief areas defined in section 273.134, 
        paragraph (b). 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2002 and thereafter. 
           Sec. 11.  Minnesota Statutes 2000, section 298.018, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WITHIN TACONITE TAX RELIEF AREA.] The 
        proceeds of the tax paid under sections 298.015 to 298.017 on 
        minerals and energy resources mined or extracted within the 
        taconite tax relief area defined in section 273.134, paragraph 
        (b), shall be allocated as follows: 
           (1) five percent to the city or town within which the 
        minerals or energy resources are mined or extracted; 
           (2) ten percent to the taconite municipal aid account to be 
        distributed as provided in section 298.282; 
           (3) ten percent to the school district within which the 
        minerals or energy resources are mined or extracted; 
           (4) 20 percent to a group of school districts comprised of 
        those school districts wherein the mineral or energy resource 
        was mined or extracted or in which there is a qualifying 
        municipality as defined by section 273.134, paragraph (b), in 
        direct proportion to school district indexes as follows:  for 
        each school district, its pupil units determined under section 
        126C.05 for the prior school year shall be multiplied by the 
        ratio of the average adjusted net tax capacity per pupil unit 
        for school districts receiving aid under this clause as 
        calculated pursuant to chapters 122A, 126C, and 127A for the 
        school year ending prior to distribution to the adjusted net tax 
        capacity per pupil unit of the district.  Each district shall 
        receive that portion of the distribution which its index bears 
        to the sum of the indices for all school districts that receive 
        the distributions; 
           (5) 20 percent to the county within which the minerals or 
        energy resources are mined or extracted; 
           (6) 20 percent to St. Louis county acting as the counties' 
        fiscal agent to be distributed as provided in sections 273.134 
        to 273.136; 
           (7) five percent to the iron range resources and 
        rehabilitation board for the purposes of section 298.22; 
           (8) five percent to the northeast Minnesota economic 
        protection trust fund; and 
           (9) five percent to the taconite environmental protection 
        fund. 
           The proceeds of the tax shall be distributed on July 15 
        each year.  
           Sec. 12.  Minnesota Statutes 2000, section 298.018, 
        subdivision 2, is amended to read: 
           Subd. 2.  [OUTSIDE TACONITE TAX RELIEF AREA.] The proceeds 
        of the tax paid under sections 298.015 to 298.017 on minerals 
        and energy resources mined or extracted outside of the taconite 
        tax relief area defined in section 273.134, paragraph (b), shall 
        be deposited in the general fund. 
           Sec. 13.  Minnesota Statutes 2000, section 298.17, is 
        amended to read: 
           298.17 [OCCUPATION TAXES TO BE APPORTIONED.] 
           All occupation taxes paid by persons, copartnerships, 
        companies, joint stock companies, corporations, and 
        associations, however or for whatever purpose organized, engaged 
        in the business of mining or producing iron ore or other ores, 
        when collected shall be apportioned and distributed in 
        accordance with the Constitution of the state of Minnesota, 
        article X, section 3, in the manner following:  90 percent shall 
        be deposited in the state treasury and credited to the general 
        fund of which four-ninths shall be used for the support of 
        elementary and secondary schools; and ten percent of the 
        proceeds of the tax imposed by this section shall be deposited 
        in the state treasury and credited to the general fund for the 
        general support of the university.  Of the moneys apportioned to 
        the general fund by this section there is annually appropriated 
        and credited to the iron range resources and rehabilitation 
        board account in the special revenue fund an amount equal to 
        that which would have been generated by a 1.5 cent tax imposed 
        by section 298.24 on each taxable ton produced in the preceding 
        calendar year, to be expended for the purposes of section 
        298.22.  The money appropriated pursuant to this section shall 
        be used (1) to provide environmental development grants to local 
        governments located within any county in region 3 as defined in 
        governor's executive order number 60, issued on June 12, 1970, 
        which does not contain a municipality qualifying pursuant to 
        section 273.134, paragraph (b), or (2) to provide economic 
        development loans or grants to businesses located within any 
        such county, provided that the county board or an advisory group 
        appointed by the county board to provide recommendations on 
        economic development shall make recommendations to the iron 
        range resources and rehabilitation board regarding the loans.  
        Payment to the iron range resources and rehabilitation board 
        account shall be made by May 15 annually. 
           Of the money allocated to Koochiching county, one-third 
        must be paid to the Koochiching county economic development 
        commission. 
           Sec. 14.  Minnesota Statutes 2000, section 298.22, 
        subdivision 2, is amended to read: 
           Subd. 2.  [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 
        There is hereby created the iron range resources and 
        rehabilitation board, consisting of 13 members, five of whom are 
        state senators appointed by the subcommittee on committees of 
        the rules committee of the senate, and five of whom are 
        representatives, appointed by the speaker of the house of 
        representatives.  The remaining members shall be appointed one 
        each by the senate majority leader, the speaker of the house of 
        representatives, and the governor and must be nonlegislators who 
        reside in a tax relief area as defined in section 273.134, 
        paragraph (b).  The members shall be appointed in January of 
        every odd-numbered year, except that the initial nonlegislator 
        members shall be appointed by July 1, 1999, and shall serve 
        until January of the next odd-numbered year.  Vacancies on the 
        board shall be filled in the same manner as the original members 
        were chosen.  At least a majority of the legislative members of 
        the board shall be elected from state senatorial or legislative 
        districts in which over 50 percent of the residents reside 
        within a tax relief area as defined in section 273.134, 
        paragraph (b).  All expenditures and projects made by the 
        commissioner of iron range resources and rehabilitation shall be 
        consistent with the priorities established in subdivision 8 and 
        shall first be submitted to the iron range resources and 
        rehabilitation board for approval by a majority of the board of 
        expenditures and projects for rehabilitation purposes as 
        provided by this section, and the method, manner, and time of 
        payment of all funds proposed to be disbursed shall be first 
        approved or disapproved by the board.  The board shall 
        biennially make its report to the governor and the legislature 
        on or before November 15 of each even-numbered year.  The 
        expenses of the board shall be paid by the state from the funds 
        raised pursuant to this section. 
           Sec. 15.  Minnesota Statutes 2000, section 298.22, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [SPENDING PRIORITY.] In making or approving any 
        expenditures on programs or projects, the commissioner and the 
        board shall give the highest priority to programs and projects 
        that target relief to those areas of the taconite tax relief 
        area as defined in section 273.134, paragraph (b), that have the 
        largest percentages of job losses and population losses directly 
        attributable to the economic downturn in the taconite industry 
        since the 1980s.  The commissioner and the board shall compare 
        the 1980 population and employment figures with the 2000 
        population and employment figures, and shall specifically 
        consider the job losses in 2000 and 2001 resulting from the 
        closure of LTV Steel Mining Company, in making or approving 
        expenditures consistent with this subdivision, as well as the 
        areas of residence of persons who suffered job loss for which 
        relief is to be targeted under this subdivision.  This 
        subdivision supersedes any other conflicting provisions of law 
        and does not preclude the commissioner and the board from making 
        expenditures for programs and projects in other areas. 
           Sec. 16.  Minnesota Statutes 2000, section 298.2211, 
        subdivision 2, is amended to read: 
           Subd. 2.  [AREA OF OPERATION.] Projects undertaken, 
        developed, or financed pursuant to this section shall be located 
        within the tax relief area defined in section 273.134, paragraph 
        (b). 
           Sec. 17.  Minnesota Statutes 2000, section 298.2213, 
        subdivision 3, is amended to read: 
           Subd. 3.  [USE OF MONEY.] The money appropriated under this 
        section may be used to provide loans, loan guarantees, interest 
        buy-downs, and other forms of participation with private sources 
        of financing, provided that a loan to a private enterprise must 
        be for a principal amount not to exceed one-half of the cost of 
        the project for which financing is sought, and the rate of 
        interest on a loan must be no less than the lesser of eight 
        percent or the rate of interest that is three percentage points 
        less than a full faith and credit obligation of the United 
        States government of comparable maturity, at the time that the 
        loan is approved.  
           Money appropriated in this section must be expended only in 
        or for the benefit of the tax relief area defined in section 
        273.134, paragraph (b), and as otherwise provided in this 
        section. 
           Sec. 18.  Minnesota Statutes 2000, section 298.2214, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREATION OF COMMITTEE; PURPOSE.] A 
        committee is created to advise the commissioner of iron range 
        resources and rehabilitation on providing higher education 
        programs in the taconite tax relief area defined in section 
        273.134, paragraph (b).  The committee is subject to section 
        15.059. 
           Sec. 19.  Minnesota Statutes 2000, section 298.223, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREATION; PURPOSES.] A fund called the 
        taconite environmental protection fund is created for the 
        purpose of reclaiming, restoring and enhancing those areas of 
        northeast Minnesota located within a tax relief area defined in 
        section 273.134, paragraph (b), that are adversely affected by 
        the environmentally damaging operations involved in mining 
        taconite and iron ore and producing iron ore concentrate and for 
        the purpose of promoting the economic development of northeast 
        Minnesota.  The taconite environmental protection fund shall be 
        used for the following purposes: 
           (a) to initiate investigations into matters the iron range 
        resources and rehabilitation board determines are in need of 
        study and which will determine the environmental problems 
        requiring remedial action; 
           (b) reclamation, restoration, or reforestation of minelands 
        not otherwise provided for by state law; 
           (c) local economic development projects including 
        construction of sewer and water systems, and other public works 
        located within a tax relief area defined in section 273.134, 
        paragraph (b); 
           (d) monitoring of mineral industry related health problems 
        among mining employees. 
           Sec. 20.  Minnesota Statutes 2000, section 298.225, 
        subdivision 1, is amended to read: 
           Subdivision 1.  (a) The distribution of the taconite 
        production tax as provided in section 298.28, subdivisions 2 3 
        to 5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 
        following amounts:  
           (1) the amount distributed pursuant to this section and 
        section 298.28, with respect to 1983 production if the 
        production for the year prior to the distribution year is no 
        less than 42,000,000 taxable tons.  If the production is less 
        than 42,000,000 taxable tons, the amount of the distributions 
        shall be reduced proportionately at the rate of two percent for 
        each 1,000,000 tons, or part of 1,000,000 tons by which the 
        production is less than 42,000,000 tons; or 
           (2)(i) for the distributions made pursuant to section 
        298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 
        (c), 40.5 percent of the amount distributed pursuant to this 
        section and section 298.28, with respect to 1983 production; 
           (ii) for the distributions made pursuant to section 298.28, 
        subdivision 5, paragraphs (b) and (d), 75 percent of the amount 
        distributed pursuant to this section and section 298.28, with 
        respect to 1983 production.  
           (b) The distribution of the taconite production tax as 
        provided in section 298.28, subdivision 2, shall equal the 
        following amount: 
           (1) if the production for the year prior to the 
        distribution year is at least 42,000,000 taxable tons, the 
        amount distributed pursuant to this section and section 298.28 
        with respect to 1999 production; or 
           (2) if the production for the year prior to the 
        distribution year is less than 42,000,000 taxable tons, the 
        amount distributed pursuant to this section and section 298.28 
        with respect to 1999 production, reduced proportionately at the 
        rate of two percent for each 1,000,000 tons or part of 1,000,000 
        tons by which the production is less than 42,000,000 tons. 
           [EFFECTIVE DATE; RETROACTIVE APPLICATION.] This section is 
        effective for distributions in 2001 and thereafter.  For the 
        distribution paid in February 2001 only, as soon as practicable 
        after the date of final enactment of this act, the commissioner 
        of iron range resources and rehabilitation shall pay two-thirds 
        of any additional amounts required under this section from the 
        taconite environmental protection fund and one-third of any 
        additional amounts required under this section from the 
        northeast Minnesota economic protection trust fund, as directed 
        by the commissioner of revenue. 
           Sec. 21.  Minnesota Statutes 2000, section 298.227, is 
        amended to read: 
           298.227 [TACONITE ECONOMIC DEVELOPMENT FUND.] 
           An amount equal to that distributed pursuant to each 
        taconite producer's taxable production and qualifying sales 
        under section 298.28, subdivision 9a, shall be held by the iron 
        range resources and rehabilitation board in a separate taconite 
        economic development fund for each taconite and direct reduced 
        ore producer.  Money from the fund for each producer shall be 
        released only on the written authorization of by the 
        commissioner after review by a joint committee consisting of an 
        equal number of representatives of the salaried employees and 
        the nonsalaried production and maintenance employees of that 
        producer.  The district 11 director of the United States 
        Steelworkers of America, on advice of each local employee 
        president, shall select the employee members.  In nonorganized 
        operations, the employee committee shall be elected by the 
        nonsalaried production and maintenance employees.  Each 
        producer's joint committee may authorize release of The review 
        must be completed no later than six months after the producer 
        presents a proposal for expenditure of the funds to the 
        committee.  The funds held pursuant to this section may be 
        released only for acquisition of equipment and facilities for 
        the producer or for research and development in Minnesota on new 
        mining, or taconite, iron, or steel production technology, but 
        only if the producer provides a matching expenditure to be used 
        for the same purpose of at least 50 percent of the distribution 
        based on 14.7 cents per ton beginning with distributions in 
        2002.  Funds may be released only upon a majority vote of the 
        representatives of the committee.  If a taconite production 
        facility is sold after operations at the facility had ceased, 
        any money remaining in the fund for the former producer may be 
        released to the purchaser of the facility on the terms otherwise 
        applicable to the former producer under this section.  If a 
        producer fails to provide matching funds for a proposed 
        expenditure within six months after the commissioner approves 
        release of the funds, the funds are available for release to 
        another producer in proportion to the distribution provided and 
        under the conditions of this section.  Any portion of the fund 
        which is not released by a joint committee the commissioner 
        within two years of its deposit in the fund shall be divided 
        between the taconite environmental protection fund created in 
        section 298.223 and the northeast Minnesota economic protection 
        trust fund created in section 298.292 for placement in their 
        respective special accounts.  Two-thirds of the unreleased funds 
        shall be distributed to the taconite environmental protection 
        fund and one-third to the northeast Minnesota economic 
        protection trust fund. 
           Sec. 22.  Minnesota Statutes 2000, section 298.24, 
        subdivision 1, is amended to read: 
           Subdivision 1.  (a) For concentrate produced in 1999 2001, 
        2002, and 2003, 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 $2.103 per gross ton of 
        merchantable iron ore concentrate produced therefrom.  
           (b) For concentrates produced in 2000 2004 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" 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 $2.103 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. 
           Sec. 23.  Minnesota Statutes 2000, section 298.28, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CITIES; TOWNS.] (a) 12.5 cents per taxable ton, 
        less any amount distributed under subdivision 8, and paragraph 
        (b), must be allocated to the taconite municipal aid account to 
        be distributed as provided in section 298.282. 
           (b) An amount must be allocated to towns or cities that is 
        annually certified by the county auditor of a county containing 
        a taconite tax relief area as defined in section 273.134, 
        paragraph (b), within which there is (1) an organized township 
        if, as of January 2, 1982, more than 75 percent of the assessed 
        valuation of the township consists of iron ore or (2) a city if, 
        as of January 2, 1980, more than 75 percent of the assessed 
        valuation of the city consists of iron ore.  
           (c) The amount allocated under paragraph (b) will be the 
        portion of a township's or city's certified levy equal to the 
        proportion of (1) the difference between 50 percent of January 
        2, 1982, assessed value in the case of a township and 50 percent 
        of the January 2, 1980, assessed value in the case of a city and 
        its current assessed value to (2) the sum of its current 
        assessed value plus the difference determined in (1), provided 
        that the amount distributed shall not exceed $55 per capita in 
        the case of a township or $75 per capita in the case of a city.  
        For purposes of this limitation, population will be determined 
        according to the 1980 decennial census conducted by the United 
        States Bureau of the Census.  If the current assessed value of 
        the township exceeds 50 percent of the township's January 2, 
        1982, assessed value, or if the current assessed value of the 
        city exceeds 50 percent of the city's January 2, 1980, assessed 
        value, this paragraph shall not apply.  For purposes of this 
        paragraph, "assessed value," when used in reference to years 
        other than 1980 or 1982, means the appropriate net tax 
        capacities multiplied by 10.2. 
           Sec. 24.  Minnesota Statutes 2000, section 298.28, 
        subdivision 4, is amended to read: 
           Subd. 4.  [SCHOOL DISTRICTS.] (a) 22.28 cents per taxable 
        ton plus the increase provided in paragraph (d) must be 
        allocated to qualifying school districts to be distributed, 
        based upon the certification of the commissioner of revenue, 
        under paragraphs (b) and (c), except as otherwise provided in 
        paragraph (f). 
           (b) 4.46 cents per taxable ton must be distributed to the 
        school districts in which the lands from which taconite was 
        mined or quarried were located or within which the concentrate 
        was produced.  The distribution must be based on the 
        apportionment formula prescribed in subdivision 2. 
           (c)(i) 17.82 cents per taxable ton, less any amount 
        distributed under paragraph (e), shall be distributed to a group 
        of school districts comprised of those school districts in which 
        the taconite was mined or quarried or the concentrate produced 
        or in which there is a qualifying municipality as defined by 
        section 273.134, paragraph (b), in direct proportion to school 
        district indexes as follows:  for each school district, its 
        pupil units determined under section 126C.05 for the prior 
        school year shall be multiplied by the ratio of the average 
        adjusted net tax capacity per pupil unit for school districts 
        receiving aid under this clause as calculated pursuant to 
        chapters 122A, 126C, and 127A for the school year ending prior 
        to distribution to the adjusted net tax capacity per pupil unit 
        of the district.  Each district shall receive that portion of 
        the distribution which its index bears to the sum of the indices 
        for all school districts that receive the distributions.  
           (ii) Notwithstanding clause (i), each school district that 
        receives a distribution under sections 298.018; 298.23 to 
        298.28, exclusive of any amount received under this clause; 
        298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
        imposing a tax on severed mineral values that is less than the 
        amount of its levy reduction under section 126C.48, subdivision 
        8, for the second year prior to the year of the distribution 
        shall receive a distribution equal to the difference; the amount 
        necessary to make this payment shall be derived from 
        proportionate reductions in the initial distribution to other 
        school districts under clause (i).  
           (d) Any school district described in paragraph (c) where a 
        levy increase pursuant to section 126C.17, subdivision 9, is was 
        authorized by referendum for taxes payable in 2001, shall 
        receive a distribution from a fund that receives a distribution 
        in 1998 of 21.3 cents per ton.  On July 15 of 1999, and each 
        year thereafter, the increase over the amount established for 
        the prior year shall be determined according to the increase in 
        the implicit price deflator as provided in section 298.24, 
        subdivision 1.  Each district shall receive the product of: 
           (i) $175 times the pupil units identified in section 
        126C.05, subdivision 1, enrolled in the second previous year or 
        the 1983-1984 school year, whichever is greater, less the 
        product of 1.8 percent times the district's taxable net tax 
        capacity in the second previous year; times 
           (ii) the lesser of: 
           (A) one, or 
           (B) the ratio of the sum of the amount certified pursuant 
        to section 126C.17, subdivision 6, in the previous year, plus 
        the amount certified pursuant to section 126C.17, subdivision 8, 
        in the previous year, plus the referendum aid according to 
        section 126C.17, subdivision 7, for the current year, plus an 
        amount equal to the reduction under section 126C.17, subdivision 
        12, to the product of 1.8 percent times the district's taxable 
        net tax capacity in the second previous year. 
           If the total amount provided by paragraph (d) is 
        insufficient to make the payments herein required then the 
        entitlement of $175 per pupil unit shall be reduced uniformly so 
        as not to exceed the funds available.  Any amounts received by a 
        qualifying school district in any fiscal year pursuant to 
        paragraph (d) shall not be applied to reduce general education 
        aid which the district receives pursuant to section 126C.13 or 
        the permissible levies of the district.  Any amount remaining 
        after the payments provided in this paragraph shall be paid to 
        the commissioner of iron range resources and rehabilitation who 
        shall deposit the same in the taconite environmental protection 
        fund and the northeast Minnesota economic protection trust fund 
        as provided in subdivision 11. 
           Each district receiving money according to this paragraph 
        shall reserve $25 times the number of pupil units in the 
        district.  It may use the money for early childhood programs or 
        for outcome-based learning programs that enhance the academic 
        quality of the district's curriculum.  The outcome-based 
        learning programs must be approved by the commissioner of 
        children, families, and learning. 
           (e) There shall be distributed to any school district the 
        amount which the school district was entitled to receive under 
        section 298.32 in 1975. 
           (f) Effective with the distribution in 2003 and thereafter, 
        five percent of the distributions to school districts under 
        paragraphs (b), (c), and (e); subdivision 6, paragraph (c); 
        subdivision 11; and section 477A.15, shall be distributed to the 
        general fund.  The remainder shall be distributed to the cities 
        and townships within each school district in the proportion that 
        their taxable net tax capacity within the school district bears 
        to the taxable net tax capacity of the school district for 
        property taxes payable in the year prior to distribution.  No 
        city or township shall receive a distribution greater than its 
        levy for taxes payable in the year prior to distribution. 
           Sec. 25.  Minnesota Statutes 2000, section 298.28, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PROPERTY TAX RELIEF.] (a) In 1999, 38.81 2002 
        and thereafter, 35.9 cents per taxable ton, less any amount 
        required to be distributed under paragraphs (b) and (c), and 
        less any amount required to be deducted under paragraph (d), 
        must be allocated to St. Louis county acting as the counties' 
        fiscal agent, to be distributed as provided in sections 273.134 
        to 273.136. 
           (b) If an electric power plant owned by and providing the 
        primary source of power for a taxpayer mining and concentrating 
        taconite is located in a county other than the county in which 
        the mining and the concentrating processes are conducted, .1875 
        cent per taxable ton of the tax imposed and collected from such 
        taxpayer shall be paid to the county. 
           (c) If an electric power plant owned by and providing the 
        primary source of power for a taxpayer mining and concentrating 
        taconite is located in a school district other than a school 
        district in which the mining and concentrating processes are 
        conducted, .7282 cent per taxable ton of the tax imposed and 
        collected from the taxpayer shall be paid to the school district.
           (d) Two cents per taxable ton must be deducted from the 
        amount allocated to the St. Louis county auditor under paragraph 
        (a). 
           [EFFECTIVE DATE.] This section is effective for 
        distributions in 2002 and thereafter. 
           Sec. 26.  Minnesota Statutes 2000, section 298.28, 
        subdivision 7, is amended to read: 
           Subd. 7.  [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 
        For the 1998 distribution, 6.5 cents per taxable ton shall be 
        paid to the iron range resources and rehabilitation board for 
        the purposes of section 298.22.  That amount shall be increased 
        in 1999 and subsequent years in the same proportion as the 
        increase in the implicit price deflator as provided in section 
        298.24, subdivision 1.  The amount distributed pursuant to this 
        subdivision shall be expended within or for the benefit of a tax 
        relief area defined in section 273.134, paragraph (b).  No part 
        of the fund provided in this subdivision may be used to provide 
        loans for the operation of private business unless the loan is 
        approved by the governor. 
           Sec. 27.  Minnesota Statutes 2000, section 298.28, 
        subdivision 9a, is amended to read: 
           Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 
        15.4 30.1 cents per ton for distributions in 1999, 2000, 2001, 
        and 2002 and thereafter must be paid to the taconite economic 
        development fund.  No distribution shall be made under this 
        paragraph in any year in which total industry production falls 
        below 30 million tons. 
           (b) An amount equal to 50 percent of the tax under section 
        298.24 for concentrate sold in the form of pellet chips and 
        fines not exceeding 5/16 inch in size and not including crushed 
        pellets shall be paid to the taconite economic development 
        fund.  The amount paid shall not exceed $700,000 annually for 
        all companies.  If the initial amount to be paid to the fund 
        exceeds this amount, each company's payment shall be prorated so 
        the total does not exceed $700,000. 
           [EFFECTIVE DATE.] This section is effective for 
        distribution in 2002 and thereafter upon enactment of section 39.
           Sec. 28.  Minnesota Statutes 2000, section 298.28, 
        subdivision 10, is amended to read: 
           Subd. 10.  [INCREASE.] Beginning with distributions in 
        2000, the amounts amount determined under subdivisions 6, 
        paragraph (a), and subdivision 9 shall be increased in the same 
        proportion as the increase in the implicit price deflator as 
        provided in section 298.24, subdivision 1.  Beginning with 
        distributions in 2003, the amount determined under subdivision 
        6, paragraph (a), shall be increased in the same proportion as 
        the increase in the implicit price deflator as provided in 
        section 298.24, subdivision 1.  
           The distributions per ton determined under subdivisions 5, 
        paragraphs (b) and (d), and 6, paragraph (b), for distribution 
        in 1988 and subsequent years shall be the distribution per ton 
        determined for distribution in 1987.  The distribution per ton 
        under subdivision 6, paragraph (c), for distribution in 2000 and 
        subsequent years shall be 81 percent of the distribution per ton 
        determined for distribution in 1987. 
           [EFFECTIVE DATE.] This section is effective for 
        distributions in 2002 and thereafter. 
           Sec. 29.  Minnesota Statutes 2000, section 298.282, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The amount deposited with the county as 
        provided in section 298.28, subdivision 3, shall must be 
        distributed as provided by this section, among the 
        municipalities comprising a tax relief area under section 
        273.134, paragraph (b), as amended hereby, each being herein 
        referred to in this section as a qualifying municipality. 
           Sec. 30.  Minnesota Statutes 2000, section 298.292, 
        subdivision 2, is amended to read: 
           Subd. 2.  [USE OF MONEY.] Money in the northeast Minnesota 
        economic protection trust fund may be used for the following 
        purposes:  
           (1) to provide loans, loan guarantees, interest buy-downs 
        and other forms of participation with private sources of 
        financing, but a loan to a private enterprise shall be for a 
        principal amount not to exceed one-half of the cost of the 
        project for which financing is sought, and the rate of interest 
        on a loan shall be no less than the lesser of eight percent or 
        an interest rate three percentage points less than a full faith 
        and credit obligation of the United States government of 
        comparable maturity, at the time that the loan is approved; 
           (2) to fund reserve accounts established to secure the 
        payment when due of the principal of and interest on bonds 
        issued pursuant to section 298.2211; 
           (3) to pay in periodic payments or in a lump sum payment 
        any or all of the interest on bonds issued pursuant to chapter 
        474 for the purpose of constructing, converting, or retrofitting 
        heating facilities in connection with district heating systems 
        or systems utilizing alternative energy sources; and 
           (4) to invest in a venture capital fund or enterprise that 
        will provide capital to other entities that are engaging in, or 
        that will engage in, projects or programs that have the purposes 
        set forth in subdivision 1.  No investments may be made in a 
        venture capital fund or enterprise unless at least two other 
        unrelated investors make investments of at least $500,000 in the 
        venture capital fund or enterprise, and the investment by the 
        northeast Minnesota economic protection trust fund may not 
        exceed the amount of the largest investment by an unrelated 
        investor in the venture capital fund or enterprise.  For 
        purposes of this subdivision, an "unrelated investor" is a 
        person or entity that is not related to the entity in which the 
        investment is made or to any individual who owns more than 40 
        percent of the value of the entity, in any of the following 
        relationships:  spouse, parent, child, sibling, employee, or 
        owner of an interest in the entity that exceeds ten percent of 
        the value of all interests in it.  For purposes of determining 
        the limitations under this clause, the amount of investments 
        made by an investor other than the northeast Minnesota economic 
        protection trust fund is the sum of all investments made in the 
        venture capital fund or enterprise during the period beginning 
        one year before the date of the investment by the northeast 
        Minnesota economic protection trust fund.  
           Money from the trust fund shall be expended only in or for 
        the benefit of the tax relief area defined in section 273.134, 
        paragraph (b). 
           Sec. 31.  Minnesota Statutes 2000, section 298.293, is 
        amended to read: 
           298.293 [EXPENDING FUNDS.] 
           The funds provided by section 298.28, subdivision 11, 
        relating to the northeast Minnesota economic protection trust 
        fund, except money expended pursuant to Laws 1982, Second 
        Special Session, chapter 2, sections 8 to 14, shall be expended 
        only in an amount that does not exceed the sum of the net 
        interest, dividends, and earnings arising from the investment of 
        the trust for the preceding 12 calendar months from the date of 
        the authorization plus, for fiscal year 1983, $10,000,000 from 
        the corpus of the fund.  The funds may be spent only in or for 
        the benefit of those areas that are tax relief areas as defined 
        in section 273.134, paragraph (b).  If during any year the 
        taconite property tax account under sections 273.134 to 273.136 
        does not contain sufficient funds to pay the property tax relief 
        specified in Laws 1977, chapter 423, article X, section 4, there 
        is appropriated from this trust fund to the relief account 
        sufficient funds to pay the relief specified in Laws 1977, 
        chapter 423, article X, section 4. 
           Sec. 32.  Minnesota Statutes 2000, section 298.296, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXPENDITURE OF FUNDS.] Before January 1, 
        2002 2003, funds may be expended on projects and for 
        administration of the trust fund only from the net interest, 
        earnings, and dividends arising from the investment of the trust 
        at any time, including net interest, earnings, and dividends 
        that have arisen prior to July 13, 1982, plus $10,000,000 made 
        available for use in fiscal year 1983, except that any amount 
        required to be paid out of the trust fund to provide the 
        property tax relief specified in Laws 1977, chapter 423, article 
        X, section 4, and to make school bond payments and payments to 
        recipients of taconite production tax proceeds pursuant to 
        section 298.225, may be taken from the corpus of the trust.  
        Additionally, upon recommendation by the board, up to 
        $13,000,000 from the corpus of the trust may be made available 
        for use as provided in subdivision 4, and up to $10,000,000 from 
        the corpus of the trust may be made available for use as 
        provided in section 298.2961.  On and after January 1, 2002 
        2003, funds may be expended on projects and for administration 
        from any assets of the trust.  Annual administrative costs, not 
        including detailed engineering expenses for the projects, shall 
        not exceed five percent of the net interest, dividends, and 
        earnings arising from the trust in the preceding fiscal year.  
           Principal and interest received in repayment of loans made 
        pursuant to this section, and earnings on other investments made 
        under section 298.292, subdivision 2, clause (4), shall be 
        deposited in the state treasury and credited to the trust.  
        These receipts are appropriated to the board for the purposes of 
        sections 298.291 to 298.298. 
           Sec. 33.  Minnesota Statutes 2000, section 298.2961, is 
        amended to read: 
           298.2961 [PRODUCER GRANTS.] 
           Subdivision 1.  [APPROPRIATION.] (a) $10,000,000 is 
        appropriated from the northeast Minnesota economic protection 
        trust fund to a special account in the taconite area 
        environmental protection fund for grants or loans to producers 
        on a project-by-project basis as provided in this section. 
           (b) The proceeds of the tax designated under section 
        298.28, subdivision 9b, are appropriated for grants and loans to 
        producers on a project-by-project basis as provided in this 
        section. 
           Subd. 2.  [PROJECTS; APPROVAL.] (a) Projects funded must be 
        for: 
           (1) environmentally unique reclamation projects; or 
           (2) pit or plant repairs, expansions, or modernizations 
        other than for a value added iron products plant that extend the 
        life of the plant; or 
           (3) haulage trucks and equipment and mining shovels. 
           (b) To be proposed by the board, a project must be approved 
        by at least eight iron range resources and rehabilitation board 
        members.  The money for a project may be spent only upon 
        approval of the project by the governor.  The board may submit 
        supplemental projects for approval at any time. 
           (c) The board may require that it receive an equity 
        percentage in any project to which it contributes under this 
        section.  
           Sec. 34.  Minnesota Statutes 2000, section 298.298, is 
        amended to read: 
           298.298 [LONG-RANGE PLAN.] 
           Consistent with the policy established in sections 298.291 
        to 298.298, the iron range resources and rehabilitation board 
        shall prepare and present to the governor and the legislature by 
        January 1, 1984 a long-range plan for the use of the northeast 
        Minnesota economic protection trust fund for the economic 
        development and diversification of the tax relief area defined 
        in section 273.134, paragraph (b).  The iron range resources and 
        rehabilitation board shall, before November 15 of each even 
        numbered year, prepare a report to the governor and legislature 
        updating and revising this long-range plan and reporting on the 
        iron range resources and rehabilitation board's progress on 
        those matters assigned to it by law.  After January 1, 1984, no 
        project shall be approved by the iron range resources and 
        rehabilitation board which is not consistent with the goals and 
        objectives established in the long-range plan. 
           Sec. 35.  Minnesota Statutes 2000, section 298.75, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
        provided, the following words, when used in this section, shall 
        have the meanings herein ascribed to them.  
           (1) "Aggregate material" shall mean nonmetallic natural 
        mineral aggregate including, but not limited to sand, silica 
        sand, gravel, building stone, crushed rock, limestone, and 
        granite, and borrow, but only if the borrow is transported on a 
        public road, street, or highway.  Aggregate material shall not 
        include dimension stone and dimension granite.  Aggregate 
        material must be measured or weighed after it has been extracted 
        from the pit, quarry, or deposit.  
           (2) "Person" shall mean any individual, firm, partnership, 
        corporation, organization, trustee, association, or other entity.
           (3) "Operator" shall mean any person engaged in the 
        business of removing aggregate material from the surface or 
        subsurface of the soil, for the purpose of sale, either directly 
        or indirectly, through the use of the aggregate material in a 
        marketable product or service.  
           (4) "Extraction site" shall mean a pit, quarry, or deposit 
        containing aggregate material and any contiguous property to the 
        pit, quarry, or deposit which is used by the operator for 
        stockpiling the aggregate material.  
           (5) "Importer" shall mean any person who buys aggregate 
        material produced from a county not listed in paragraph (6) or 
        another state and causes the aggregate material to be imported 
        into a county in this state which imposes a tax on aggregate 
        material.  
           (6) "County" shall mean the counties of Pope, Stearns, 
        Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 
        Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 
        Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 
        Sibley, Hennepin, Washington, Chisago, and Ramsey.  County also 
        means any other county whose board has voted after a public 
        hearing to impose the tax under this section and has notified 
        the commissioner of revenue of the imposition of the tax. 
           [EFFECTIVE DATE.] This section is effective August 1, 2001. 
           Sec. 36.  Minnesota Statutes 2000, section 298.75, 
        subdivision 2, is amended to read: 
           Subd. 2.  A county shall impose upon every importer and 
        operator a production tax equal up to ten cents per cubic yard 
        or up to seven cents per ton of aggregate material removed 
        except that the county board may decide not to impose this tax 
        if it determines that in the previous year operators removed 
        less than 20,000 tons or 14,000 cubic yards of aggregate 
        material from that county.  The tax shall be imposed on 
        aggregate material produced in the county when the aggregate 
        material is transported from the extraction site or sold.  When 
        aggregate material is stored in a stockpile within the state of 
        Minnesota and a public highway, road or street is not used for 
        transporting the aggregate material, the tax shall be imposed 
        either when the aggregate material is sold, or when it is 
        transported from the stockpile site, or when it is used from the 
        stockpile, whichever occurs first.  The tax shall be imposed on 
        an importer when the aggregate material is imported into the 
        county that imposes the tax.  
           If the aggregate material is transported directly from the 
        extraction site to a waterway, railway, or another mode of 
        transportation other than a highway, road or street, the tax 
        imposed by this section shall be apportioned equally between the 
        county where the aggregate material is extracted and the county 
        to which the aggregate material is originally transported.  If 
        that destination is not located in Minnesota, then the county 
        where the aggregate material was extracted shall receive all of 
        the proceeds of the tax.  
           [EFFECTIVE DATE.] This section is effective for aggregate 
        material sold, imported, transported, or used from a stockpile 
        after July 31, 2001. 
           Sec. 37.  Minnesota Statutes 2000, section 471.58, is 
        amended to read: 
           471.58 [RANGE ASSOCIATION OF MUNICIPALITIES AND SCHOOLS; 
        MEMBERSHIP.] 
           For the purpose of providing an areawide approach to 
        problems which demand coordinated and cooperative actions and 
        which are common to those areas of northeast Minnesota affected 
        by operations involved in mining iron ore and taconite and 
        producing concentrate therefrom, and for the purpose of 
        promoting the general welfare and economic development of the 
        cities, towns and school districts within the iron ranges area 
        of northeast Minnesota, any city, town or school district in 
        which the net tax capacity consists in part of iron ore, or 
        lands containing taconite or semitaconite or which is located in 
        whole or part in the tax relief area defined by section 273.134, 
        paragraph (b), may pay annual dues in the range association of 
        municipalities and schools.  The association may sue, be sued, 
        intervene and act in a civil action in which the outcome of the 
        action will have an effect upon the interest of any of its 
        members. 
           Sec. 38.  [SPECIAL MUNICIPAL AID FOR TAXES PAYABLE IN 2002 
        ONLY.] 
           Subdivision 1.  [QUALIFYING MUNICIPALITIES.] Municipalities 
        wholly or partially contained within a school district within 
        the taconite tax relief area defined in Minnesota Statutes, 
        section 273.134, paragraph (b), whose levy for taxes payable in 
        2001 was reduced under Minnesota Statutes, section 126C.48, 
        subdivision 8, are eligible for supplemental aid in calendar 
        year 2002 under this section.  Each qualifying municipality is 
        eligible for aid equal to (i) the amount of the district's levy 
        reduction times (ii) the portion of the municipality's taxable 
        net tax capacity within the boundaries of the school district, 
        divided by (iii) the district's total taxable net tax capacity, 
        with all computations based on taxes payable in 2001.  The 
        commissioner of revenue, in consultation with the commissioner 
        of children, families, and learning, shall make all necessary 
        calculations to determine the aid amounts under this section. 
           Subd. 2.  [APPROPRIATION.] The amounts necessary to make 
        the payments required under this section are appropriated from 
        the taconite property tax relief account to the commissioner of 
        revenue in fiscal year 2003.  Payments to qualifying 
        municipalities shall be made on the dates prescribed in 
        Minnesota Statutes, section 477A.015. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2002 only. 
           Sec. 39.  [APPROPRIATION.] 
           The commissioner of revenue shall determine a state aid 
        amount equal to a tax of 33 cents per taxable ton of iron ore 
        concentrates for production year 2001 and 22 cents per taxable 
        ton of iron ore concentrates for production years 2002 and 
        thereafter.  There is appropriated from the general fund to the 
        commissioner an amount equal to the state aid determined under 
        this section.  It must be distributed under Minnesota Statutes, 
        section 298.28, as if the aid were production tax revenues. 

                                   ARTICLE 7 
                               TAX ADMINISTRATION 
           Section 1.  Minnesota Statutes 2000, section 16D.08, 
        subdivision 2, is amended to read: 
           Subd. 2.  [POWERS.] (a) In addition to the collection 
        remedies available to private collection agencies in this state, 
        the commissioner, with legal assistance from the attorney 
        general, may utilize any statutory authority granted to a 
        referring agency for purposes of collecting debt owed to that 
        referring agency.  The commissioner may also delegate to the 
        enterprise the tax collection remedies in sections 270.06, 
        clauses (7) and (17), excluding the power to subpoena witnesses; 
        270.66; 270.69, excluding subdivisions 7 and 13; 270.70, 
        excluding subdivision 14; 270.7001 to 270.72; and 290.92, 
        subdivision 23, except that a continuous wage levy under section 
        290.92, subdivision 23, is only effective for 70 days, unless no 
        competing wage garnishments, executions, or levies are served 
        within the 70-day period, in which case a wage levy is 
        continuous until a competing garnishment, execution, or levy is 
        served in the second or a succeeding 70-day period, in which 
        case a continuous wage levy is effective for the remainder of 
        that period.  A debtor who qualifies for cancellation of 
        collection costs under section 16D.11, subdivision 3, clause 
        (1), can apply to the commissioner for reduction or release of a 
        continuous wage levy, if the debtor establishes that the debtor 
        needs all or a portion of the wages being levied upon to pay for 
        essential living expenses, such as food, clothing, shelter, 
        medical care, or expenses necessary for maintaining employment.  
        The commissioner's determination not to reduce or release a 
        continuous wage levy is appealable to district court.  The word 
        "tax" or "taxes" when used in the tax collection statutes listed 
        in this subdivision also means debts referred under this chapter.
           (b) For debts other than state taxes or, child support, or 
        student loans, before any of the tax collection remedies listed 
        in this subdivision can be used, except for the remedies in 
        section 270.06, clauses (7) and (17), if the referring agency 
        has not already obtained a judgment or filed a lien, the 
        commissioner must first obtain a judgment against the debtor.  
        For student loans when the referring agency has not obtained a 
        judgment or filed a lien, before using the tax collection 
        remedies listed in this subdivision, except for the remedies in 
        section 270.06, clauses (7) and (17), the commissioner shall 
        give the debtor 30 days' notice in writing, which may be served 
        in any manner permitted in section 270.68 for service of a 
        summons and complaint.  The notice must advise the debtor of the 
        debtor's right to request that the commissioner commence a court 
        action, and that if no such request is made within 30 days after 
        service of the notice, the commissioner may use these tax 
        collection remedies.  If a timely request is made, the 
        commissioner shall obtain a judgment before using these tax 
        collection remedies. 
           [EFFECTIVE DATE.] This section is effective for student 
        loans referred to the commissioner for collection on or after 
        July 1, 2001. 
           Sec. 2.  Minnesota Statutes 2000, section 84.922, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [PROOF OF SALES TAX PAYMENT.] A person applying 
        for initial registration in Minnesota of an all-terrain vehicle 
        shall provide a purchaser's certificate showing a complete 
        description of the all-terrain vehicle, the seller's name and 
        address, the full purchase price of the all-terrain vehicle, and 
        the trade-in allowance, if any.  The certificate also must 
        include information showing either that (1) the sales and use 
        tax under chapter 297A was paid, or (2) the purchase was exempt 
        from tax under chapter 297A.  The certificate is not required if 
        the applicant provides a receipt, invoice, or other document 
        that shows the all-terrain vehicle was purchased from a retailer 
        maintaining a place of business in this state as defined in 
        section 297A.66, subdivision 1. 
           [EFFECTIVE DATE.] This section is effective for 
        registrations occurring on or after August 1, 2001. 
           Sec. 3.  Minnesota Statutes 2000, section 144.3831, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COLLECTION AND PAYMENT OF FEE.] The public water 
        supply described in subdivision 1 shall: 
           (1) collect the fees assessed on its service connections; 
           (2) pay the department of revenue health an amount 
        equivalent to the fees based on the total number of service 
        connections.  The service connections for each public water 
        supply described in subdivision 1 shall be verified every four 
        years by the department of health; and 
           (3) pay one-fourth of the total yearly fee to the 
        department of revenue health each calendar quarter.  The first 
        quarterly payment is due on or before September 30, 1992.  In 
        lieu of quarterly payments, a public water supply described in 
        subdivision 1 with fewer than 50 service connections may make a 
        single annual payment by June 30 each year, starting in 1993.  
        The fees payable to the department of revenue health shall be 
        deposited in the state treasury as nondedicated state government 
        special revenue fund revenues. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 4.  Minnesota Statutes 2000, section 270.06, is 
        amended to read: 
           270.06 [POWERS AND DUTIES.] 
           The commissioner of revenue shall: 
           (1) have and exercise general supervision over the 
        administration of the assessment and taxation laws of the state, 
        over assessors, town, county, and city boards of review and 
        equalization, and all other assessing officers in the 
        performance of their duties, to the end that all assessments of 
        property be made relatively just and equal in compliance with 
        the laws of the state; 
           (2) confer with, advise, and give the necessary 
        instructions and directions to local assessors and local boards 
        of review throughout the state as to their duties under the laws 
        of the state; 
           (3) direct proceedings, actions, and prosecutions to be 
        instituted to enforce the laws relating to the liability and 
        punishment of public officers and officers and agents of 
        corporations for failure or negligence to comply with the 
        provisions of the laws of this state governing returns of 
        assessment and taxation of property, and cause complaints to be 
        made against local assessors, members of boards of equalization, 
        members of boards of review, or any other assessing or taxing 
        officer, to the proper authority, for their removal from office 
        for misconduct or negligence of duty; 
           (4) require county attorneys to assist in the commencement 
        of prosecutions in actions or proceedings for removal, 
        forfeiture and punishment for violation of the laws of this 
        state in respect to the assessment and taxation of property in 
        their respective districts or counties; 
           (5) require town, city, county, and other public officers 
        to report information as to the assessment of property, 
        collection of taxes received from licenses and other sources, 
        and such other information as may be needful in the work of the 
        department of revenue, in such form and upon such blanks as the 
        commissioner may prescribe; 
           (6) require individuals, copartnerships, companies, 
        associations, and corporations to furnish information concerning 
        their capital, funded or other debt, current assets and 
        liabilities, earnings, operating expenses, taxes, as well as all 
        other statements now required by law for taxation purposes; 
           (7) subpoena witnesses, at a time and place reasonable 
        under the circumstances, to appear and give testimony, and to 
        produce books, records, papers and documents for inspection and 
        copying relating to any matter which the commissioner may have 
        authority to investigate or determine; 
           (8) issue a subpoena which does not identify the person or 
        persons with respect to whose liability the subpoena is issued, 
        but only if (a) the subpoena relates to the investigation of a 
        particular person or ascertainable group or class of persons, 
        (b) there is a reasonable basis for believing that such person 
        or group or class of persons may fail or may have failed to 
        comply with any law administered by the commissioner, (c) the 
        information sought to be obtained from the examination of the 
        records (and the identity of the person or persons with respect 
        to whose liability the subpoena is issued) is not readily 
        available from other sources, (d) the subpoena is clear and 
        specific as to the information sought to be obtained, and (e) 
        the information sought to be obtained is limited solely to the 
        scope of the investigation.  Provided further that the party 
        served with a subpoena which does not identify the person or 
        persons with respect to whose tax liability the subpoena is 
        issued shall have the right, within 20 days after service of the 
        subpoena, to petition the district court for the judicial 
        district in which lies the county in which that party is located 
        for a determination as to whether the commissioner of revenue 
        has complied with all the requirements in (a) to (e), and thus, 
        whether the subpoena is enforceable.  If no such petition is 
        made by the party served within the time prescribed, the 
        subpoena shall have the force and effect of a court order; 
           (9) cause the deposition of witnesses residing within or 
        without the state, or absent therefrom, to be taken, upon notice 
        to the interested party, if any, in like manner that depositions 
        of witnesses are taken in civil actions in the district court, 
        in any matter which the commissioner may have authority to 
        investigate or determine; 
           (10) investigate the tax laws of other states and countries 
        and to formulate and submit to the legislature such legislation 
        as the commissioner may deem expedient to prevent evasions of 
        assessment and taxing laws, and secure just and equal taxation 
        and improvement in the system of assessment and taxation in this 
        state; 
           (11) consult and confer with the governor upon the subject 
        of taxation, the administration of the laws in regard thereto, 
        and the progress of the work of the department of revenue, and 
        furnish the governor, from time to time, such assistance and 
        information as the governor may require relating to tax matters; 
           (12) transmit to the governor, on or before the third 
        Monday in December of each even-numbered year, and to each 
        member of the legislature, on or before November 15 of each 
        even-numbered year, the report of the department of revenue for 
        the preceding years, showing all the taxable property in the 
        state and the value of the same, in tabulated form; 
           (13) inquire into the methods of assessment and taxation 
        and ascertain whether the assessors faithfully discharge their 
        duties, particularly as to their compliance with the laws 
        requiring the assessment of all property not exempt from 
        taxation; 
           (14) administer and enforce the assessment and collection 
        of state taxes and fees, including the use of any remedy 
        available to nongovernmental creditors, and, from time to time, 
        make, publish, and distribute rules for the administration and 
        enforcement of assessments and fees administered by the 
        commissioner and state tax laws.  The rules have the force of 
        law; 
           (15) prepare blank forms for the returns required by state 
        tax law and distribute them throughout the state, furnishing 
        them subject to charge on application; 
           (16) prescribe rules governing the qualification and 
        practice of agents, attorneys, or other persons representing 
        taxpayers before the commissioner.  The rules may require that 
        those persons, agents, and attorneys show that they are of good 
        character and in good repute, have the necessary qualifications 
        to give taxpayers valuable services, and are otherwise competent 
        to advise and assist taxpayers in the presentation of their case 
        before being recognized as representatives of taxpayers.  After 
        due notice and opportunity for hearing, the commissioner may 
        suspend and disbar bar from further practice before the 
        commissioner any person, agent, or attorney who is shown to be 
        incompetent or disreputable, who refuses to comply with the 
        rules, or who with intent to defraud, willfully or knowingly 
        deceives, misleads, or threatens a taxpayer or prospective 
        taxpayer, by words, circular, letter, or by advertisement.  This 
        clause does not curtail the rights of individuals to appear in 
        their own behalf or partners or corporations' officers to appear 
        in behalf of their respective partnerships or corporations; 
           (17) appoint agents as the commissioner considers necessary 
        to make examinations and determinations.  The agents have the 
        rights and powers conferred on the commissioner to subpoena, 
        examine, and copy books, records, papers, or memoranda, subpoena 
        witnesses, administer oaths and affirmations, and take 
        testimony.  In addition to administrative subpoenas of the 
        commissioner and the agents, upon demand of the commissioner or 
        an agent, the court administrator of any district court shall 
        issue a subpoena for the attendance of a witness or the 
        production of books, papers, records, or memoranda before the 
        agent for inspection and copying.  Disobedience of a court 
        administrator's subpoena shall be punished by the district court 
        of the district in which the subpoena is issued, or in the case 
        of a subpoena issued by the commissioner or an agent, by the 
        district court of the district in which the party served with 
        the subpoena is located, in the same manner as contempt of the 
        district court; 
           (18) appoint and employ additional help, purchase supplies 
        or materials, or incur other expenditures in the enforcement of 
        state tax laws as considered necessary.  The salaries of all 
        agents and employees provided for in this chapter shall be fixed 
        by the appointing authority, subject to the approval of the 
        commissioner of administration; 
           (19) execute and administer any agreement with the 
        secretary of the treasury of the United States or a 
        representative of another state regarding the exchange of 
        information and administration of the tax laws; 
           (20) administer and enforce the provisions of sections 
        325D.30 to 325D.42, the Minnesota Unfair Cigarette Sales Act; 
           (21) authorize the use of unmarked motor vehicles to 
        conduct seizures or criminal investigations pursuant to the 
        commissioner's authority; and 
           (22) exercise other powers and perform other duties 
        required of or imposed upon the commissioner of revenue by law.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 5.  Minnesota Statutes 2000, section 270.60, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [FEES; APPROPRIATION.] (a) The commissioner may 
        enter into an agreement with the governing body of any federally 
        recognized Indian reservation in Minnesota concerning fees 
        administered by the commissioner that are paid by the tribe, 
        members of the tribe, or persons who conduct business with the 
        tribe, or otherwise imposed on on-reservation activities.  The 
        agreement may provide for the refund or sharing of the fee.  The 
        commissioner may make any payments required by the agreement 
        from the fees collected. 
           (b) Each head of an agency, board, or other governmental 
        entity that administers a program that is funded by fees 
        administered by the commissioner may sign an agreement entered 
        into by the commissioner under this subdivision.  An agreement 
        is not valid until signed by the head of each agency, board, or 
        other governmental entity that administers a program funded by 
        the particular fee covered in an agreement and by the 
        commissioner of revenue. 
           (c) There is annually appropriated to the commissioner of 
        revenue from the funds for which the fees are collected the 
        amounts necessary to make payments as provided in this 
        subdivision. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment and applies to all fees administered 
        by the commissioner of revenue for which timely claims for 
        refund have been, or can be, filed. 
           Sec. 6.  Minnesota Statutes 2000, section 270.70, 
        subdivision 13, is amended to read: 
           Subd. 13.  [LEVY AND SALE BY SHERIFF.] If any tax payable 
        to the commissioner of revenue or to the department of revenue 
        is not paid as provided in subdivision 2, the commissioner may, 
        within five years after the date of assessment of the 
        tax, within the time periods provided in subdivision 1 for 
        collection of taxes, delegate the authority granted by 
        subdivision 1, by means of issuing a warrant to the sheriff of 
        any county of the state commanding the sheriff, as agent for the 
        commissioner, to levy upon and sell the real and personal 
        property of the person liable for the payment or collection of 
        the tax and to levy upon the rights to property of that person 
        within the county, or to levy upon and seize any property within 
        the county on which there is a lien provided in section 270.69, 
        and to return the warrant to the commissioner and pay to the 
        commissioner the money collected by virtue thereof by a time to 
        be therein specified not less than 60 days from the date of the 
        warrant.  The sheriff shall proceed thereunder to levy upon and 
        seize any property of the person and to levy upon the rights to 
        property of the person within the county (except the person's 
        homestead or that property which is exempt from execution 
        pursuant to section 550.37), or to levy upon and seize any 
        property within the county on which there is a lien provided in 
        section 270.69.  For purposes of the preceding sentence, the 
        term "tax" shall include any penalty, interest and costs 
        properly payable.  The sheriff shall then sell so much of the 
        property levied upon as is required to satisfy the taxes, 
        interest, and penalties, together with the sheriff's costs; but 
        the sales, and the time and manner of redemption therefrom, 
        shall, to the extent not provided in sections 270.701 to 
        270.709, be governed by chapter 550.  The proceeds of the sales, 
        less the sheriff's costs, shall be turned over to the 
        commissioner, who shall then apply the proceeds as provided in 
        section 270.708. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment for all taxes for which issuance of a 
        warrant under this subdivision has not been barred as of that 
        date. 
           Sec. 7.  Minnesota Statutes 2000, section 270.73, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [POSTING, NOTICE.] Pursuant to the 
        authority to disclose under section 270B.12, subdivision 4, the 
        commissioner shall, by the 15th of each month, submit to the 
        commissioner of public safety a list of all taxpayers who are 
        required to pay, withhold, or collect the tax imposed by section 
        290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or 
        297A.02, or local sales and use tax payable to the commissioner 
        of revenue, or a local option tax administered and collected by 
        the commissioner of revenue, and who are ten days or more 
        delinquent in either filing a tax return or paying the tax. 
           The commissioner of revenue is under no obligation to list 
        a taxpayer whose business is inactive.  At least ten days before 
        notifying the commissioner of public safety, the commissioner of 
        revenue shall notify the taxpayer of the intended action. 
           The commissioner of public safety shall post the list in 
        the same manner as provided in section 340A.318, subdivision 3.  
        The list will prominently show the date of posting.  If a 
        taxpayer previously listed files all returns and pays all taxes 
        then due, the commissioner shall notify the commissioner of 
        public safety within two business days. 
           [EFFECTIVE DATE.] This section is effective for lists 
        submitted to the commissioner of public safety on or after the 
        day following final enactment. 
           Sec. 8.  Minnesota Statutes 2000, section 270A.03, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DEBT.] "Debt" means a legal obligation of a 
        natural person to pay a fixed and certain amount of money, which 
        equals or exceeds $25 and which is due and payable to a claimant 
        agency.  The term includes criminal fines imposed under section 
        609.10 or 609.125 and restitution.  A debt may arise under a 
        contractual or statutory obligation, a court order, or other 
        legal obligation, but need not have been reduced to judgment.  
           A debt includes any legal obligation of a current recipient 
        of assistance which is based on overpayment of an assistance 
        grant where that payment is based on a client waiver or an 
        administrative or judicial finding of an intentional program 
        violation; or where the debt is owed to a program wherein the 
        debtor is not a client at the time notification is provided to 
        initiate recovery under this chapter and the debtor is not a 
        current recipient of food stamps, transitional child care, or 
        transitional medical assistance. 
           A debt does not include any legal obligation to pay a 
        claimant agency for medical care, including hospitalization if 
        the income of the debtor at the time when the medical care was 
        rendered does not exceed the following amount: 
           (1) for an unmarried debtor, an income of $6,400 $8,800 or 
        less; 
           (2) for a debtor with one dependent, an income 
        of $8,200 $11,270 or less; 
           (3) for a debtor with two dependents, an income 
        of $9,700 $13,330 or less; 
           (4) for a debtor with three dependents, an income of 
        $11,000 $15,120 or less; 
           (5) for a debtor with four dependents, an income 
        of $11,600 $15,950 or less; and 
           (6) for a debtor with five or more dependents, an income of 
        $12,100 $16,630 or less.  
           The income amounts in this subdivision shall be adjusted 
        for inflation for debts incurred in calendar years 1991 2001 and 
        thereafter.  The dollar amount of each income level that applied 
        to debts incurred in the prior year shall be increased in the 
        same manner as provided in section 290.06, subdivision 2d, for 
        the expansion of the tax rate brackets 1f of the Internal 
        Revenue Code of 1986, as amended through December 31, 2000, 
        except that for the purposes of this subdivision the percentage 
        increase shall be determined from the year starting September 1, 
        1999, and ending August 31, 2000, as the base year for adjusting 
        for inflation for debts incurred after December 31, 2000. 
           Debt also includes an agreement to pay a MinnesotaCare 
        premium, regardless of the dollar amount of the premium 
        authorized under section 256L.15, subdivision 1a. 
           [EFFECTIVE DATE.] This section is effective for debts 
        incurred after December 31, 2000. 
           Sec. 9.  Minnesota Statutes 2000, section 270A.11, is 
        amended to read: 
           270A.11 [DATA PRIVACY.] 
           Private and confidential data on individuals may be 
        exchanged among the department, the taxpayer's rights advocate, 
        the attorney general, the claimant agency, and the debtor as 
        necessary to accomplish and effectuate the intent of sections 
        270A.01 to 270A.12, as provided by section 13.05, subdivision 4, 
        clause (b).  The department may disclose to the claimant agency 
        only the debtor's name, address, social security number and the 
        amount of the refund, and in the case of a joint return, the 
        name of the debtor's spouse.  Any person employed by, or 
        formerly employed by, a claimant agency who discloses any such 
        information for any other purpose, shall be subject to the civil 
        and criminal penalties of section 270B.18.  Data collected by 
        the department from claimant agencies relating to claims filed 
        under this chapter are private data on individuals. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 10.  Minnesota Statutes 2000, section 270B.02, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PROTECTED NONPUBLIC DATA.] The following are 
        protected nonpublic data as defined in section 13.02, 
        subdivision 13: 
           (1) criteria for determining which computer processed 
        returns are selected for audit; 
           (2) criteria for determining which returns are selected for 
        an in-depth audit; and 
           (3) criteria for determining which accounts receivable 
        balances below a stated amount are written off or canceled; and 
           (4) criteria or information used in determining which 
        alleged criminal violations of any law administered by the 
        commissioner are selected for criminal investigation.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 11.  Minnesota Statutes 2000, section 270B.02, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CONFIDENTIAL DATA ON INDIVIDUALS; PROTECTED 
        NONPUBLIC DATA.] (a) Except as provided in paragraph (b), the 
        name or existence of an informer, informer letters, and other 
        unsolicited data, in whatever form, given to the department of 
        revenue by a person, other than the data subject, who informs 
        that a specific taxpayer is not or may not be in compliance with 
        tax laws, or nontax laws administered by the department of 
        revenue, including laws not listed in section 270B.01, 
        subdivision 8, are confidential data on individuals or protected 
        nonpublic data as defined in section 13.02, subdivisions 3 and 
        13. 
           (b) Data under paragraph (a) may be disclosed with the 
        consent of the informer or upon a written finding by a court 
        that the information provided by the informer was false and that 
        there is evidence that the information was provided in bad 
        faith.  This subdivision does not alter disclosure 
        responsibilities or obligations under the rules of criminal 
        procedure. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 12.  Minnesota Statutes 2000, section 270B.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  [INVESTIGATIVE DATA.] For purposes of any law 
        administered by the department of revenue, including laws not 
        listed in section 270B.01, subdivision 8, investigative data 
        collected or created by the department of revenue in order to 
        prepare a case against a person, whether known or unknown, for 
        the commission of a crime is confidential or protected nonpublic 
        during an investigation.  When the investigation becomes 
        inactive, as defined in section 13.82, subdivision 5, the 
        classifications otherwise applicable under any other laws become 
        effective data is private or nonpublic. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 13.  Minnesota Statutes 2000, section 272.02, 
        subdivision 10, is amended to read: 
           Subd. 10.  [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 
        Personal property used primarily for the abatement and control 
        of air, water, or land pollution is exempt to the extent that it 
        is so used, and real property is exempt if it is used primarily 
        for abatement and control of air, water, or land pollution as 
        part of an agricultural operation, as a part of a centralized 
        treatment and recovery facility operating under a permit issued 
        by the Minnesota pollution control agency pursuant to chapters 
        115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
        and 7045.0020 to 7045.1260, as a wastewater treatment facility 
        and for the treatment, recovery, and stabilization of metals, 
        oils, chemicals, water, sludges, or inorganic materials from 
        hazardous industrial wastes, or as part of an electric 
        generation system.  For purposes of this subdivision, personal 
        property includes ponderous machinery and equipment used in a 
        business or production activity that at common law is considered 
        real property. 
           Any taxpayer requesting exemption of all or a portion of 
        any real property or any equipment or device, or part thereof, 
        operated primarily for the control or abatement of air or, 
        water, or land pollution shall file an application with the 
        commissioner of revenue.  The equipment or device shall meet 
        standards, rules, or criteria prescribed by the Minnesota 
        pollution control agency, and must be installed or operated in 
        accordance with a permit or order issued by that agency.  The 
        Minnesota pollution control agency shall upon request of the 
        commissioner furnish information or and advice to the 
        commissioner.  
           The information and advice furnished by the Minnesota 
        pollution control agency must include statements as to whether 
        the equipment, device, or real property meets a standard, rule, 
        criteria, guideline, policy, or order of the Minnesota pollution 
        control agency, and whether the equipment, device, or real 
        property is installed or operated in accordance with it.  On 
        determining that property qualifies for exemption, the 
        commissioner shall issue an order exempting the property from 
        taxation.  The equipment or, device, or real property shall 
        continue to be exempt from taxation as long as the permit order 
        issued by the Minnesota pollution control agency commissioner 
        remains in effect. 
           [EFFECTIVE DATE.] This section is effective for exemption 
        applications received on or after August 1, 2001.  
           Sec. 14.  Minnesota Statutes 2000, section 273.061, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [OFFICE CREATED; APPOINTMENT, 
        QUALIFICATIONS.] Every county in this state shall have a county 
        assessor.  The county assessor shall be appointed by the board 
        of county commissioners.  The assessor shall be selected and 
        appointed because of knowledge and training in the field of 
        property taxation and appointment shall be approved by the 
        commissioner of revenue before the same shall become effective.  
        Upon receipt by the county commissioners of the commissioner of 
        revenue's refusal to approve an appointment, the term of the 
        appointee shall terminate at the end of that day.  
           The commissioner of revenue may grant approval on a 
        probationary basis for a period of two years.  The commissioner 
        must base the decision to impose a probationary period on 
        objective and consistent criteria.  At the end of the two-year 
        probationary period, the commissioner may either refuse to 
        approve the person's appointment for the remainder of the 
        person's four-year term, approve the person's appointment but 
        only for another two-year probationary period, or 
        unconditionally approve the person's appointment for the 
        remainder of the four-year term for which the person was 
        originally appointed by the county board.  The criteria shall 
        not be considered rules and are not subject to the 
        Administrative Procedure Act. 
           Notwithstanding any law to the contrary, a county assessor 
        must have senior accreditation from the state board of assessors 
        by January 1, 1992, or within two years of the assessor's first 
        appointment under this section, whichever is later. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 15.  Minnesota Statutes 2000, section 273.061, 
        subdivision 2, is amended to read: 
           Subd. 2.  [TERM; VACANCY.] (a) The terms of county 
        assessors appointed under this section shall be four years.  A 
        new term shall begin on January 1 of every fourth year after 
        1973.  When any vacancy in the office occurs, the board of 
        county commissioners, within 30 90 days thereafter, shall fill 
        the same by appointment for the remainder of the term, following 
        the procedure prescribed in subdivision 1.  The term of the 
        county assessor may be terminated by the board of county 
        commissioners at any time, on charges of inefficiency or neglect 
        of duty malfeasance, misfeasance, or nonfeasance by the 
        commissioner of revenue.  If the board of county commissioners 
        does not intend to reappoint a county assessor who has been 
        certified by the state board of assessors, the board shall 
        present written notice to the county assessor not later than 90 
        days prior to the termination of the assessor's term, that it 
        does not intend to reappoint the assessor.  If written notice is 
        not timely made, the county assessor will automatically be 
        reappointed by the board of county commissioners. 
           The commissioner of revenue may recommend to the state 
        board of assessors the nonrenewal, suspension, or revocation of 
        an assessor's license as provided in sections 270.41 to 270.53.  
           (b) In the event of a vacancy in the office of county 
        assessor, through death, resignation or other reasons, the 
        deputy (or chief deputy, if more than one) shall perform the 
        functions of the office.  If there is no deputy, the county 
        auditor shall designate a person to perform the duties of the 
        office until an appointment is made as provided in clause (a).  
        Such person shall perform the duties of the office for a period 
        not exceeding 30 90 days during which the county board must 
        appoint a county assessor.  Such 30-day 90-day period may, 
        however, be extended by written approval of the commissioner of 
        revenue. 
           (c) In the case of the first appointment under paragraph 
        (a) of a county assessor who is accredited but who does not have 
        senior accreditation, an approval of the appointment by the 
        commissioner shall be provisional, provided that a county 
        assessor appointed to a provisional term under this paragraph 
        must reapply to the commissioner at the end of the provisional 
        term.  A provisional term may not exceed two years.  The 
        commissioner shall not approve the appointment for the remainder 
        of the four-year term unless the assessor has obtained senior 
        accreditation. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 16.  Minnesota Statutes 2000, section 273.072, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Any county and any city or town lying 
        wholly or partially within the county and constituting a 
        separate assessment district may, by agreement entered into 
        under section 471.59 and approved by the commissioner of 
        revenue, provide for the assessment of property in the 
        municipality or town by the county assessor.  Any two or more 
        cities or towns constituting separate assessment districts, 
        whether their assessors are elective or appointive, may enter 
        into an agreement under section 471.59 for the assessment of 
        property in the contracting units by the assessor of one of the 
        units or by an assessor who is jointly employed.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 17.  [273.0755] [TRAINING AND EDUCATION OF PROPERTY 
        TAX PERSONNEL.] 
           (a) Beginning with the four-year period starting on July 1, 
        2000, every person licensed by the state board of assessors at 
        the Accredited Minnesota Assessor level or higher, shall 
        successfully complete a week-long Minnesota laws course 
        sponsored by the department of revenue at least once in every 
        four-year period.  An assessor need not attend the course if 
        they successfully pass the test for the course. 
           (b) The commissioner of revenue may require that each 
        county, and each city for which the city assessor performs the 
        duties of county assessor, have (i) a person on the assessor's 
        staff who is certified by the department of revenue in sales 
        ratio calculations, (ii) an officer or employee who is certified 
        by the department of revenue in tax calculations, and (iii) an 
        officer or employee who is certified by the department of 
        revenue in the proper preparation of abstracts of assessment.  
        The commissioner of revenue may require that each county have an 
        officer or employee who is certified by the department of 
        revenue in the proper preparation of abstracts of tax lists. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001, 
        and thereafter. 
           Sec. 18.  Minnesota Statutes 2000, section 273.1104, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NOTICE OF MARKET VALUE.] On or before May 1 in 
        each year, the commissioner shall send to each person subject to 
        the tax on unmined iron ores and to each taxing district 
        affected, a notice of the market value of the unmined ores as 
        determined by the commissioner prior to adjustment under 
        subdivision 1.  Said notice shall be sent by mail directed to 
        such person at the address given in the report filed and the 
        assessor of such taxing district, but the validity of the tax 
        shall not be affected by the failure of the commissioner of 
        revenue to mail such notice or the failure of the person subject 
        to the tax to receive it. 
           On the first secular day following May 20, the commissioner 
        of revenue shall hold a hearing which may be adjourned from day 
        to day.  All relevant and material evidence having probative 
        value with respect to the issues shall be submitted at the 
        hearing and such hearing shall not be a "contested case" within 
        the meaning of section 14.02, subdivision 3.  Every person 
        subject to such tax may at such hearing present evidence and 
        argument on any matter bearing upon the validity or correctness 
        of the tax determined to be due, and the commissioner of revenue 
        shall review the determination of such tax. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 19.  Minnesota Statutes 2000, section 273.111, 
        subdivision 4, is amended to read: 
           Subd. 4.  [DETERMINATION OF VALUE.] The value of any real 
        estate described in subdivision 3 shall upon timely application 
        by the owner, in the manner provided in subdivision 8, be 
        determined solely with reference to its appropriate agricultural 
        classification and value notwithstanding sections 272.03, 
        subdivision 8, and 273.11.  In determining the value for ad 
        valorem tax purposes, the assessor shall use sales data obtained 
        from for agricultural lands located outside the seven 
        metropolitan counties but within the region used for computing 
        the range of values under section 273.11, subdivision 10.  The 
        sales shall have having similar soil types, number of degree 
        days, and other similar agricultural characteristics as 
        contained in section 273.11, subdivision 10.  Furthermore, the 
        assessor shall not consider any added values resulting from 
        nonagricultural factors. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 20.  Minnesota Statutes 2000, section 273.121, is 
        amended to read: 
           273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
           Any county assessor or city assessor having the powers of a 
        county assessor, valuing or classifying taxable real property 
        shall in each year notify those persons whose property is to be 
        assessed or reclassified included on the assessment roll that 
        year if the person's address is known to the assessor, otherwise 
        the occupant of the property.  The notice shall be in writing 
        and shall be sent by ordinary mail at least ten days before the 
        meeting of the local board of review or appeal and equalization 
        under section 274.01 or the review process established under 
        section 274.13, subdivision 1c.  It shall contain:  (1) the 
        market value for the current and prior assessment, (2) the 
        limited market value under section 273.11, subdivision 1a for 
        the current and prior assessment, (3) the qualifying amount of 
        any improvements under section 273.11, subdivision 16 for the 
        current assessment, (4) the market value subject to taxation 
        after subtracting the amount of any qualifying improvements for 
        the current assessment, (5) the new classification of the 
        property for the current and prior assessment, (6) a note that 
        if the property is homestead and at least 35 years old, 
        improvements made to the property may be eligible for a 
        valuation exclusion under section 273.11, subdivision 16, (7) 
        the assessor's office address, and (8) the dates, places, and 
        times set for the meetings of the local board of review or 
        appeal and equalization, the review process established under 
        section 274.13, subdivision 1c, and the county board of appeal 
        and equalization.  If the assessment roll is not complete, the 
        notice shall be sent by ordinary mail at least ten days prior to 
        the date on which the board of review has adjourned The 
        commissioner of revenue shall specify the form of the notice.  
        The assessor shall attach to the assessment roll a statement 
        that the notices required by this section have been mailed.  Any 
        assessor who is not provided sufficient funds from the 
        assessor's governing body to provide such notices, may make 
        application to the commissioner of revenue to finance such 
        notices.  The commissioner of revenue shall conduct an 
        investigation and, if satisfied that the assessor does not have 
        the necessary funds, issue a certification to the commissioner 
        of finance of the amount necessary to provide such notices.  The 
        commissioner of finance shall issue a warrant for such amount 
        and shall deduct such amount from any state payment to such 
        county or municipality.  The necessary funds to make such 
        payments are hereby appropriated.  Failure to receive the notice 
        shall in no way affect the validity of the assessment, the 
        resulting tax, the procedures of any board of review or 
        equalization, or the enforcement of delinquent taxes by 
        statutory means. 
           [EFFECTIVE DATE.] This section is effective for notices 
        required to be mailed in 2002 and thereafter. 
           Sec. 21.  Minnesota Statutes 2000, section 274.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORDINARY BOARD; MEETINGS, DEADLINES, 
        GRIEVANCES.] (a) The town board of a town, or the council or 
        other governing body of a city, is the board of review appeal 
        and equalization except (1) in cities whose charters provide for 
        a board of equalization or (2) in any city or town that has 
        transferred its local board of review power and duties to the 
        county board as provided in subdivision 3.  The county assessor 
        shall fix a day and time when the board or the board of 
        equalization shall meet in the assessment districts of the 
        county.  Notwithstanding any law or city charter to the 
        contrary, a city board of equalization shall be referred to as a 
        board of appeal and equalization.  On or before February 15 of 
        each year the assessor shall give written notice of the time to 
        the city or town clerk.  Notwithstanding the provisions of any 
        charter to the contrary, the meetings must be held between April 
        1 and May 31 each year.  The clerk shall give published and 
        posted notice of the meeting at least ten days before the date 
        of the meeting.  
           If in any county, at least 25 percent of the total net tax 
        capacity of a city or town is noncommercial seasonal residential 
        recreational property classified under section 273.13, 
        subdivision 25, the county must hold two countywide 
        informational meetings on Saturdays.  The meetings will allow 
        noncommercial seasonal residential recreational taxpayers to 
        discuss their property valuation with the appropriate assessment 
        staff.  These Saturday informational meetings must be scheduled 
        to allow the owner of the noncommercial seasonal residential 
        recreational property the opportunity to attend one of the 
        meetings prior to the scheduled board of review for their city 
        or town.  The Saturday meeting dates must be contained on the 
        notice of valuation of real property under section 273.121.  
           The board shall meet at the office of the clerk to review 
        the assessment and classification of property in the town or 
        city.  No changes in valuation or classification which are 
        intended to correct errors in judgment by the county assessor 
        may be made by the county assessor after the board of review has 
        adjourned in those cities or towns that hold a local board of 
        review; however, corrections of errors that are merely clerical 
        in nature or changes that extend homestead treatment to property 
        are permitted after adjournment until the tax extension date for 
        that assessment year.  The changes must be fully documented and 
        maintained in the assessor's office and must be available for 
        review by any person.  A copy of the changes made during this 
        period in those cities or towns that hold a local board of 
        review must be sent to the county board no later than December 
        31 of the assessment year.  
           (b) The board shall determine whether the taxable property 
        in the town or city has been properly placed on the list and 
        properly valued by the assessor.  If real or personal property 
        has been omitted, the board shall place it on the list with its 
        market value, and correct the assessment so that each tract or 
        lot of real property, and each article, parcel, or class of 
        personal property, is entered on the assessment list at its 
        market value.  No assessment of the property of any person may 
        be raised unless the person has been duly notified of the intent 
        of the board to do so.  On application of any person feeling 
        aggrieved, the board shall review the assessment or 
        classification, or both, and correct it as appears just.  The 
        board may not make an individual market value adjustment or 
        classification change that would benefit the property in cases 
        where the owner or other person having control over the property 
        will not permit the assessor to inspect the property and the 
        interior of any buildings or structures.  
           (c) A local board of review may reduce assessments upon 
        petition of the taxpayer but the total reductions must not 
        reduce the aggregate assessment made by the county assessor by 
        more than one percent.  If the total reductions would lower the 
        aggregate assessments made by the county assessor by more than 
        one percent, none of the adjustments may be made.  The assessor 
        shall correct any clerical errors or double assessments 
        discovered by the board of review without regard to the one 
        percent limitation.  
           (d) A majority of the members may act at the meeting, and 
        adjourn from day to day until they finish hearing the cases 
        presented.  The assessor shall attend, with the assessment books 
        and papers, and take part in the proceedings, but must not 
        vote.  The county assessor, or an assistant delegated by the 
        county assessor shall attend the meetings.  The board shall list 
        separately, on a form appended to the assessment book, all 
        omitted property added to the list by the board and all items of 
        property increased or decreased, with the market value of each 
        item of property, added or changed by the board, placed opposite 
        the item.  The county assessor shall enter all changes made by 
        the board in the assessment book.  
           (e) Except as provided in subdivision 3, if a person fails 
        to appear in person, by counsel, or by written communication 
        before the board after being duly notified of the board's intent 
        to raise the assessment of the property, or if a person feeling 
        aggrieved by an assessment or classification fails to apply for 
        a review of the assessment or classification, the person may not 
        appear before the county board of appeal and equalization for a 
        review of the assessment or classification.  This paragraph does 
        not apply if an assessment was made after the local board 
        meeting, as provided in section 273.01, or if the person can 
        establish not having received notice of market value at least 
        five days before the local board of review meeting.  
           (f) The local board of review or the board of equalization 
        must complete its work and adjourn within 20 days from the time 
        of convening stated in the notice of the clerk, unless a longer 
        period is approved by the commissioner of revenue.  No action 
        taken after that date is valid.  All complaints about an 
        assessment or classification made after the meeting of the board 
        must be heard and determined by the county board of 
        equalization.  A nonresident may, at any time, before the 
        meeting of the board of review file written objections to an 
        assessment or classification with the county assessor.  The 
        objections must be presented to the board of review at its 
        meeting by the county assessor for its consideration. 
           [EFFECTIVE DATE.] This section is effective January 1, 
        2002, and thereafter. 
           Sec. 22.  Minnesota Statutes 2000, section 274.13, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MEMBERS; MEETINGS; RULES FOR EQUALIZING 
        ASSESSMENTS.] The county commissioners, or a majority of them, 
        with the county auditor, or, if the auditor cannot be present, 
        the deputy county auditor, or, if there is no deputy, the court 
        administrator of the district court, shall form a board for the 
        equalization of the assessment of the property of the county, 
        including the property of all cities whose charters provide for 
        a board of equalization.  This board shall be referred to as the 
        county board of appeal and equalization.  The board shall meet 
        annually, on the date specified in section 274.14, at the office 
        of the auditor.  Each member shall take an oath to fairly and 
        impartially perform duties as a member.  The board shall examine 
        and compare the returns of the assessment of property of the 
        towns or districts, and equalize them so that each tract or lot 
        of real property and each article or class of personal property 
        is entered on the assessment list at its market value, subject 
        to the following rules: 
           (1) The board shall raise the valuation of each tract or 
        lot of real property which in its opinion is returned below its 
        market value to the sum believed to be its market value.  The 
        board must first give notice of intention to raise the valuation 
        to the person in whose name it is assessed, if the person is a 
        resident of the county.  The notice must fix a time and place 
        for a hearing.  
           (2) The board shall reduce the valuation of each tract or 
        lot which in its opinion is returned above its market value to 
        the sum believed to be its market value. 
           (3) The board shall raise the valuation of each class of 
        personal property which in its opinion is returned below its 
        market value to the sum believed to be its market value.  It 
        shall raise the aggregate value of the personal property of 
        individuals, firms, or corporations, when it believes that the 
        aggregate valuation, as returned, is less than the market value 
        of the taxable personal property possessed by the individuals, 
        firms, or corporations, to the sum it believes to be the market 
        value.  The board must first give notice to the persons of 
        intention to do so.  The notice must set a time and place for a 
        hearing. 
           (4) The board shall reduce the valuation of each class of 
        personal property that is returned above its market value to the 
        sum it believes to be its market value.  Upon complaint of a 
        party aggrieved, the board shall reduce the aggregate valuation 
        of the individual's personal property, or of any class of 
        personal property for which the individual is assessed, which in 
        its opinion has been assessed at too large a sum, to the sum it 
        believes was the market value of the individual's personal 
        property of that class.  
           (5) The board must not reduce the aggregate value of all 
        the property of its county, as submitted to the county board of 
        equalization, with the additions made by the auditor under this 
        chapter, by more than one percent of its whole valuation.  The 
        board may raise the aggregate valuation of real property, and of 
        each class of personal property, of the county, or of any town 
        or district of the county, when it believes it is below the 
        market value of the property, or class of property, to the 
        aggregate amount it believes to be its market value. 
           (6) The board shall change the classification of any 
        property which in its opinion is not properly classified. 
           [EFFECTIVE DATE.] This section is effective January 1, 
        2002, and thereafter. 
           Sec. 23.  Minnesota Statutes 2000, section 282.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [RIGHTS BEFORE SALE; IMPROVEMENTS, INSURANCE, 
        DEMOLITION.] Before the sale of a parcel of forfeited land the 
        county auditor may, with the approval of the county board of 
        commissioners, provide for the repair and improvement of any 
        building or structure located upon the parcel, and may provide 
        for maintenance of tax-forfeited lands, if it is determined by 
        the county board that such repairs, improvements, or maintenance 
        are necessary for the operation, use, preservation and safety of 
        the building or structure.  If so authorized by the county 
        board, the county auditor may insure the building or structure 
        against loss or damage resulting from fire or windstorm, may 
        purchase workers' compensation insurance to insure the county 
        against claims for injury to the persons employed in the 
        building or structure by the county, and may insure the county, 
        its officers and employees against claims for injuries to 
        persons or property because of the management, use or operation 
        of the building or structure.  The county auditor may, with the 
        approval of the county board, provide for the demolition of the 
        building or structure, which has been determined by the county 
        board to be within the purview of section 299F.10, and for the 
        sale of salvaged materials from the building or structure.  The 
        county auditor, with the approval of the county board, may 
        provide for the sale of abandoned personal property under either 
        chapter 345 or 566, as appropriate.  The sale may be made by the 
        sheriff using the procedures for the sale of abandoned property 
        in section 345.15 or by the county auditor using the procedures 
        for the sale of abandoned property in section 504B.271.  The net 
        proceeds from any sale of the personal property, salvaged 
        materials, timber or other products, or leases made under this 
        law must be deposited in the forfeited tax sale fund and must be 
        distributed in the same manner as if the parcel had been sold. 
           The county auditor, with the approval of the county board, 
        may provide for the demolition of any structure on tax-forfeited 
        lands, if in the opinion of the county board, the county 
        auditor, and the land commissioner, if there is one, the sale of 
        the land with the structure on it, or the continued existence of 
        the structure by reason of age, dilapidated condition or 
        excessive size as compared with nearby structures, will result 
        in a material lessening of net tax capacities of real estate in 
        the vicinity of the tax-forfeited lands, or if the demolition of 
        the structure or structures will aid in disposing of the 
        tax-forfeited property. 
           Before the sale of a parcel of forfeited land located in an 
        urban area, the county auditor may with the approval of the 
        county board provide for the grading of the land by filling or 
        the removal of any surplus material from it.  If the physical 
        condition of forfeited lands is such that a reasonable grading 
        of the lands is necessary for the protection and preservation of 
        the property of any adjoining owner, the adjoining property 
        owner or owners may apply to the county board to have the 
        grading done.  If, after considering the application, the county 
        board believes that the grading will enhance the value of the 
        forfeited lands commensurate with the cost involved, it may 
        approve it, and the work must be performed under the supervision 
        of the county or city engineer, as the case may be, and the 
        expense paid from the forfeited tax sale fund. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 24.  Minnesota Statutes 2000, section 287.035, is 
        amended to read: 
           287.035 [IMPOSITION OF TAX.] 
           A tax of 23 cents is imposed upon each $100, or fraction 
        thereof, is imposed on the privilege of recording a mortgage.  
        The tax rate is .0023 of the debt or portion of a debt that is 
        secured by any recorded mortgage of real property located in 
        this state.  The person liable for the tax is the mortgagee 
        mortgagor.  The tax is not imposed on the lawful interest 
        amounts that may accrue with respect to a debt. 
           [EFFECTIVE DATE.] This section is effective for mortgages 
        acknowledged and recorded after July 31, 2001. 
           Sec. 25.  Minnesota Statutes 2000, section 287.04, is 
        amended to read: 
           287.04 [EXEMPTIONS.] 
           The tax imposed by section 287.035 does not apply to:  
           (a) A decree of marriage dissolution or an instrument made 
        pursuant to it.  
           (b) A mortgage given to correct a misdescription of the 
        mortgaged property. 
           (c) A mortgage or other instrument that adds additional 
        security for the same debt for which mortgage registry tax has 
        been paid.  
           (d) A contract for the conveyance of any interest in real 
        property, including a contract for deed. 
           (e) A mortgage secured by real property subject to the 
        minerals production tax of sections 298.24 to 298.28. 
           (f) The principal amount of bonds or other obligations 
        issued by the St. Paul port authority under its common revenue 
        bond fund if each of the following conditions are met. 
           (1) The bonds or other obligations are secured by a 
        mortgage on property, title to which is held by the political 
        subdivision. 
           (2) The mortgage is recorded after May 19, 1993. 
           (3) The bonds or other obligations are either (i)  
        outstanding on May 19, 1993, or (ii) issued in exchange for or 
        to otherwise refund bonds or other obligations the original 
        series of which were issued before May 19, 1993 a mortgage loan 
        made under a low and moderate income or other affordable housing 
        program, if the mortgagee is a federal, state, or local 
        government agency. 
           (g) Mortgages taken in good faith by persons or granted 
        corporations whose property is expressly exempted from taxation 
        by section 272.02, subdivisions 2 to 8, or mortgagees that are 
        by fraternal benefit societies subject to section 64B.24. 
           (h) A mortgage amendment or extension, as defined in 
        section 287.01. 
           (i) An agricultural mortgage if the proceeds of the loan 
        secured by the mortgage are used to acquire or improve real 
        property classified under section 273.13, subdivision 23, 
        paragraph (a), or (b), clause (1), (2), or (3). 
           [EFFECTIVE DATE.] This section is effective for mortgages 
        acknowledged and recorded after July 31, 2001. 
           Sec. 26.  Minnesota Statutes 2000, section 287.08, is 
        amended to read: 
           287.08 [TAX, HOW PAYABLE; RECEIPTS.] 
           (a) The tax imposed by sections 287.01 to 287.12 must be 
        paid to the treasurer of any county in this state in which the 
        real property or some part is located at or before the time of 
        filing the mortgage for record.  The treasurer shall endorse 
        receipt on the mortgage and the receipt is conclusive proof that 
        the tax has been paid in the amount stated and authorizes any 
        county recorder or registrar of titles to record the mortgage.  
        Its form, in substance, shall be "registration tax hereon of 
        ..................... dollars paid."  If the mortgage is exempt 
        from taxation the endorsement shall, in substance, be "exempt 
        from registration tax."  In either case the receipt must be 
        signed by the treasurer.  In case the treasurer is unable to 
        determine whether a claim of exemption should be allowed, the 
        tax must be paid as in the case of a taxable mortgage.  
           (b) Upon written application of the taxpayer, The county 
        treasurer may refund in whole or in part any mortgage registry 
        tax that has been erroneously paid, or a person having paid a 
        mortgage registry tax amount may seek a refund of the tax, or 
        other appropriate relief, overpayment if a written application 
        by the taxpayer is submitted to the county treasurer within 
        three and one-half years from the date of the overpayment.  If 
        the county has not issued a denial of the application, the 
        taxpayer may bring an action in tax court in the county in which 
        the tax was paid at any time after the expiration of six months 
        from the time that the application was submitted.  A denial of 
        refund may be appealed within 60 days from the date of the 
        denial by bringing an action in tax court in the county in which 
        the tax was paid, within 60 days of the payment.  The action is 
        commenced by the serving of a petition for relief on the county 
        treasurer, and by filing a copy with the court.  The county 
        attorney shall defend the action.  The county treasurer shall 
        notify the treasurer of each county that has or would receive a 
        portion of the tax as paid.  
           (c) If the county treasurer determines a refund should be 
        paid, or if a refund is ordered by the court, the county 
        treasurer of each county that actually received a portion of the 
        tax shall immediately pay a proportionate share of three percent 
        of the refund using any available county funds.  The county 
        treasurer of each county that received, or would have received, 
        a portion of the tax shall also pay their county's proportionate 
        share of the remaining 97 percent of the court-ordered refund on 
        or before the 20th day of the following month using solely the 
        mortgage registry tax funds that would be paid to the 
        commissioner of revenue on that date under section 287.12.  If 
        the funds on hand under this procedure are insufficient to fully 
        fund 97 percent of the court-ordered refund, the county 
        treasurer of the county in which the action was brought shall 
        file a claim with the commissioner of revenue under section 
        16A.48 for the remaining portion of 97 percent of the refund, 
        and shall pay over the remaining portion upon receipt of a 
        warrant from the state issued pursuant to the claim. 
           (d) When any mortgage covers real property located in more 
        than one county in this state the total tax must be paid to the 
        treasurer of the county where the mortgage is first presented 
        for recording, and the payment must be receipted as provided in 
        paragraph (a).  If the principal debt or obligation secured by 
        such a multiple county mortgage exceeds $1,000,000, the nonstate 
        portion of the tax must be divided and paid over by the county 
        treasurer receiving it, on or before the 20th day of each month 
        after receipt, to the county or counties entitled in the ratio 
        that the market value of the real property covered by the 
        mortgage in each county bears to the market value of all the 
        real property in this state described in the mortgage.  In 
        making the division and payment the county treasurer shall send 
        a statement giving the description of the real property 
        described in the mortgage and the market value of the part 
        located in each county.  For this purpose, the treasurer of any 
        county may require the treasurer of any other county to certify 
        to the former the market valuation of any tract of real property 
        in any mortgage. 
           (e) The mortgagor must pay the tax imposed by sections 
        287.01 to 287.12.  The mortgagee may undertake to collect and 
        remit the tax on behalf of the mortgagor.  If the mortgagee 
        collects money from the mortgagor to remit the tax on behalf of 
        the mortgagor, the mortgagee has a fiduciary duty to remit the 
        tax on behalf of the mortgagor as to the amount of the tax 
        collected for that purpose and the mortgagor is relieved of any 
        further obligation to pay the tax as to the amount collected by 
        the mortgagee for this purpose. 
           [EFFECTIVE DATE.] The changes in paragraph (b) of this 
        section are effective for overpayments occurring after July 31, 
        2001, and the remaining changes are effective for documents 
        acknowledged and recorded after July 31, 2001. 
           Sec. 27.  Minnesota Statutes 2000, section 287.13, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [PAYMENT TO MORTGAGEE.] If a mortgagee undertakes 
        to collect from the mortgagor the amount of the tax due under 
        sections 287.01 to 287.12 as provided in section 287.08, 
        paragraph (e), the mortgagor is not subject to the penalties 
        under this section and the mortgagee is subject to the 
        provisions of this section. 
           [EFFECTIVE DATE.] This section is effective for documents 
        acknowledged and recorded after July 31, 2001. 
           Sec. 28.  Minnesota Statutes 2000, section 287.20, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONSIDERATION.] (a) "Consideration" means 
        generally the total monetary value that is given in return for a 
        conveyance of real property in this state and includes all 
        lump-sum payments, all prior or future installment payments that 
        are required under the agreement between the parties, and the 
        fair market value of any property taken, or to be taken, in 
        exchange. 
           (b) Consideration does not include the reasonable and 
        lawful amounts of interest paid for the privilege of paying the 
        purchase price in installments and the fair market value of any 
        items of intangible personal property that are conveyed by the 
        taxable instrument. 
           (c) Consideration does not include the amount paid for the 
        personal property located on the real property being conveyed 
        and transferred as a part of the total consideration, except 
        that the amount paid for the personal property located on the 
        real property being conveyed must be included if the real 
        property being conveyed is a one-, two-, or three-unit 
        residential structure. 
           (d) When a conveyance of real property is made pursuant to 
        a contract for deed, the consideration is the price for the real 
        property reflected in the contract; except that, subject to the 
        limitations under section 287.221, when the conveyance is made 
        by a person engaged in the business of land sales or 
        construction of buildings and other improvements, or by an 
        affiliated person if the contract for deed, or other agreement 
        entered into as a condition to the seller executing the 
        contract, requires the property to be improved during the term 
        of the contract and the price of the real property as reflected 
        in the contract does not include the consideration for the 
        required improvements, then the consideration is the amount paid 
        for the land price for the real property as reflected in the 
        contract and the consideration for the required improvements 
        added during the term of the contract.  By January 1, 2001, the 
        commissioner shall adopt rules that define the phrases "engaged 
        in the business of land sales or construction of buildings and 
        other improvements" and "affiliated person" as those phrases are 
        used in this paragraph. 
           (e) "Total consideration" has the same meaning as 
        consideration. 
           (f) "Consideration, exclusive of the value of any lien or 
        encumbrance remaining at the time of sale" or "net 
        consideration" means the amount of consideration as reduced by 
        the amount outstanding under any lien that attached to the real 
        property prior to the time of sale and that is not released or 
        satisfied as a result of the sale. 
           [EFFECTIVE DATE.] This section is effective for deeds 
        acknowledged and recorded after July 31, 2001. 
           Sec. 29.  Minnesota Statutes 2000, section 287.20, 
        subdivision 9, is amended to read: 
           Subd. 9.  [REORGANIZATION.] "Reorganization" means the 
        transfer of substantially all of the assets of a corporation, a 
        limited liability company, or a partnership not in the usual or 
        regular course of business if at the time of the transfer the 
        transfer qualifies as:  (i) a corporate reorganization under 
        section 368(a) of the Internal Revenue Code of 1986, as amended 
        through December 31, 2000; or (ii) a transfer pursuant to the 
        continuation of an existing partnership under section 708 of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        2000. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        deeds acknowledged and recorded after July 31, 2001.  
           Sec. 30.  Minnesota Statutes 2000, section 287.21, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DETERMINATION OF TAX.] (a) A tax is 
        imposed on each deed or instrument by which any real property in 
        this state is granted, assigned, transferred, or otherwise 
        conveyed.  The tax applies against the net consideration. 
           (b) The tax is determined in the following manner:  (1) 
        when transfers are made by instruments pursuant to mergers, 
        consolidations, sales, or transfers of substantially all of the 
        assets of the entities as defined in section 287.20, subdivision 
        9, pursuant to plans of reorganization, the tax is $1.65; (2) 
        when there is no consideration or when the consideration, 
        exclusive of the value of any lien or encumbrance remaining 
        thereon at the time of sale, is $500 or less, the tax is $1.65; 
        or (3) when the consideration, exclusive of the value of any 
        lien or encumbrance remaining at the time of sale, exceeds $500, 
        the tax is $1.65 plus $1.65 for each additional $500 or fraction 
        of that amount .0033 of the net consideration. 
           (c) The tax is due at the time a taxable deed or instrument 
        is presented for recording. 
           [EFFECTIVE DATE.] This section is effective for documents 
        acknowledged and recorded after July 31, 2001. 
           Sec. 31.  Minnesota Statutes 2000, section 287.28, is 
        amended to read: 
           287.28 [REFUNDS OR REDEMPTION.] 
           (a) The county treasurer may refund in whole or in part any 
        tax which has been erroneously paid and may allow for or redeem 
        such of the stamps, issued under the authority of sections 
        287.20 to 287.31 as may that have been spoiled, destroyed, or 
        rendered useless or unfit for the purpose intended or for which 
        the owner may have no use or which through mistake may have been 
        improperly or unnecessarily used.  Such order Redemption shall 
        be made only upon written application of the taxpayer.  
           (b) A person having paid a deed tax amount may seek a 
        refund of the tax, or other appropriate relief, The county 
        treasurer may refund any deed tax overpayment if a written 
        application by the taxpayer is submitted to the county treasurer 
        within three and one-half years from the date of the 
        overpayment.  If the county has not issued a denial of the 
        application, the taxpayer may bring an action in tax court in 
        the county in which the tax was paid at any time after the 
        expiration of six months from the time that the application was 
        submitted.  A denial of refund may be appealed within 60 days 
        from the date of the denial by commencing an action in tax court 
        in the county where the tax was paid, within 60 days of the 
        payment.  The action is commenced by serving a petition for 
        relief on the county treasurer, and filing a copy with the 
        court.  The county attorney shall defend the action.  The county 
        treasurer shall notify the treasurer of each county that has, or 
        would receive a portion of the tax as paid.  Any refund of deed 
        tax which the county treasurer determines should be made, and 
        any court ordered refund of deed tax, shall be accomplished 
        using the refund procedures in section 287.08. 
           [EFFECTIVE DATE.] This section is effective for 
        overpayments occurring after July 31, 2001.  
           Sec. 32.  Minnesota Statutes 2000, section 289A.12, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 
        AND S CORPORATIONS.] (a) Partnerships must file a return with 
        the commissioner for each taxable year.  The return must conform 
        to the requirements of section 290.31 290.311, and must include 
        the names and addresses of the partners entitled to a 
        distributive share in their taxable net income, gain, loss, or 
        credit, and the amount of the distributive share to which each 
        is entitled.  A partnership required to file a return for a 
        partnership taxable year must furnish a copy of the information 
        required to be shown on the return to a person who is a partner 
        at any time during the taxable year, on or before the day on 
        which the return for the taxable year was filed. 
           (b) The fiduciary of an estate or trust making the return 
        required to be filed under section 289A.08, subdivision 2, for a 
        taxable year must give a beneficiary who receives a distribution 
        from the estate or trust with respect to the taxable year or to 
        whom any item with respect to the taxable year is allocated, a 
        statement containing the information required to be shown on the 
        return, on or before the date on which the return was filed. 
           (c) An S corporation must file a return with the 
        commissioner for a taxable year during which an election under 
        section 290.9725 is in effect, stating specifically the names 
        and addresses of the persons owning stock in the corporation at 
        any time during the taxable year, the number of shares of stock 
        owned by a shareholder at all times during the taxable year, the 
        shareholder's pro rata share of each item of the corporation for 
        the taxable year, and other information the commissioner 
        requires.  An S corporation required to file a return under this 
        paragraph for any taxable year must furnish a copy of the 
        information shown on the return to the person who is a 
        shareholder at any time during the taxable year, on or before 
        the day on which the return for the taxable year was filed. 
           (d) The partnership or S corporation return must be signed 
        by someone designated by the partnership or S corporation. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2000. 
           Sec. 33.  Minnesota Statutes 2000, section 289A.50, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [REFUND OF SALES TAX TO PURCHASERS.] If a vendor 
        has collected from a purchaser a tax on a transaction that is 
        not subject to the tax imposed by chapter 297A, the purchaser 
        may apply directly to the commissioner for a refund under this 
        section if: 
           (a) the purchaser is currently registered to collect and 
        remit the sales and tax or to remit the use tax; and 
           (b) the amount of the refund applied for exceeds $500. 
           The purchaser may not file more than two applications for 
        refund under this subdivision in a calendar year. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 34.  Minnesota Statutes 2000, 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 $25,680, 5.35 percent; 
           (2) On all over $25,680, but not over $102,030, 7.05 
        percent; 
           (3) On all over $102,030, 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 $17,570, 5.35 percent; 
           (2) On all over $17,570, but not over $57,710, 7.05 
        percent; 
           (3) On all over $57,710, 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 $21,630, 5.35 percent; 
           (2) On all over $21,630, but not over $86,910, 7.05 
        percent; 
           (3) On all over $86,910, 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), and 
        reduced by the Minnesota assignable portion of the subtraction 
        for United States government interest under section 290.01, 
        subdivision 19b, clause (1), 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, 2000. 
           Sec. 35.  Minnesota Statutes 2000, section 290.06, 
        subdivision 23, is amended to read: 
           Subd. 23.  [REFUND OF CONTRIBUTIONS TO POLITICAL PARTIES 
        AND CANDIDATES.] (a) A taxpayer may claim a refund equal to the 
        amount of the taxpayer's contributions made in the calendar year 
        to candidates and to a political party.  The maximum refund for 
        an individual must not exceed $50 and for a married couple, 
        filing jointly, must not exceed $100.  A refund of a 
        contribution is allowed only if the taxpayer files a form 
        required by the commissioner and attaches to the form a copy of 
        an official refund receipt form issued by the candidate or party 
        and signed by the candidate, the treasurer of the candidate's 
        principal campaign committee, or the chair or treasurer of the 
        party unit, after the contribution was received.  The receipt 
        forms must be numbered, and the data on the receipt that are not 
        public must be made available to the campaign finance and public 
        disclosure board upon its request.  A claim must be filed with 
        the commissioner no sooner than January 1 of the calendar year 
        in which the contribution was made and no later than April 15 of 
        the calendar year following the calendar year in which the 
        contribution was made.  A taxpayer may file only one claim per 
        calendar year.  Amounts paid by the commissioner after June 15 
        of the calendar year following the calendar year in which the 
        contribution was made must include interest at the rate 
        specified in section 270.76. 
           (b) No refund is allowed under this subdivision for a 
        contribution to a candidate unless the candidate: 
           (1) has signed an agreement to limit campaign expenditures 
        as provided in section 10A.322; 
           (2) is seeking an office for which voluntary spending 
        limits are specified in section 10A.25; and 
           (3) has designated a principal campaign committee.  
           This subdivision does not limit the campaign expenditures 
        of a candidate who does not sign an agreement but accepts a 
        contribution for which the contributor improperly claims a 
        refund.  
           (c) For purposes of this subdivision, "political party" 
        means a major political party as defined in section 200.02, 
        subdivision 7, or a minor political party qualifying for 
        inclusion on the income tax or property tax refund form under 
        section 10A.31, subdivision 3a.  
           A "major party" or "minor party" includes the aggregate of 
        that party's organization within each house of the legislature, 
        the state party organization, and the party organization within 
        congressional districts, counties, legislative districts, 
        municipalities, and precincts.  
           "Candidate" means a candidate as defined in section 10A.01, 
        subdivision 10, except a candidate for judicial office.  
           "Contribution" means a gift of money. 
           (d) The commissioner shall make copies of the form 
        available to the public and candidates upon request. 
           (e) The following data collected or maintained by the 
        commissioner under this subdivision are private:  the identities 
        of individuals claiming a refund, the identities of candidates 
        to whom those individuals have made contributions, and the 
        amount of each contribution.  
           (f) The commissioner shall report to the campaign finance 
        and public disclosure board by each August 1 a summary showing 
        the total number and aggregate amount of political contribution 
        refunds made on behalf of each candidate and each political 
        party.  These data are public. 
           (g) The amount necessary to pay claims for the refund 
        provided in this section is appropriated from the general fund 
        to the commissioner of revenue. 
           (h) For a taxpayer who files a claim for refund via the 
        Internet or other electronic means, the commissioner may accept 
        the number on the official receipt as documentation that a 
        contribution was made rather than the actual receipt as required 
        by paragraph (a). 
           [EFFECTIVE DATE.] This section is effective for refund 
        claims based on contributions made after December 31, 2001. 
           Sec. 36.  Minnesota Statutes 2000, section 290.067, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LIMITATIONS.] The credit for expenses incurred 
        for the care of each dependent shall not exceed $720 in any 
        taxable year, and the total credit for all dependents of a 
        claimant shall not exceed $1,440 in a taxable year.  The maximum 
        total credit shall be reduced according to the amount of the 
        income of the claimant and a spouse, if any, as follows:  
           income up to $13,350 $18,040, $720 maximum for one 
        dependent, $1,440 for all dependents; 
           income over $13,350 $18,040, the maximum credit for one 
        dependent shall be reduced by $18 for every $350 of additional 
        income, $36 for all dependents. 
           The commissioner shall construct and make available to 
        taxpayers tables showing the amount of the credit at various 
        levels of income and expenses.  The tables shall follow the 
        schedule contained in this subdivision, except that the 
        commissioner may graduate the transitions between expenses and 
        income brackets.  
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 1999. 
           Sec. 37.  Minnesota Statutes 2000, section 290.067, 
        subdivision 2b, is amended to read: 
           Subd. 2b.  [INFLATION ADJUSTMENT.] The dollar amount of the 
        income threshold at which the maximum credit begins to be 
        reduced under subdivision 2 must be adjusted for inflation.  The 
        commissioner shall adjust the threshold amount by the percentage 
        determined under section 290.06, subdivision 2d, for the taxable 
        year. make the inflation adjustments in accordance with section 
        1f of the Internal Revenue Code except that for the purposes of 
        this subdivision the percentage increase must be determined from 
        the year starting September 1, 1999, and ending August 31, 2000, 
        as the base year for adjusting for inflation for the tax year 
        beginning after December 31, 2000.  The determination of the 
        commissioner under this subdivision is not a rule under the 
        Administrative Procedures Act. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2000. 
           Sec. 38.  Minnesota Statutes 2000, 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 1.9125 percent of the first $4,460 $4,620 of earned 
        income.  The credit is reduced by 1.9125 percent of earned 
        income or modified adjusted gross income, whichever is greater, 
        in excess of $5,570 $5,770, but in no case is the credit less 
        than zero. 
           (c) For individuals with one qualifying child, the credit 
        equals 8.5 percent of the first $6,680 $6,920 of earned income 
        and 8.5 percent of earned income over $11,650 $12,080 but less 
        than $12,990 $13,450. The credit is reduced by 5.73 percent of 
        earned income or modified adjusted gross income, whichever is 
        greater, in excess of $14,560 $15,080, but in no case is the 
        credit less than zero. 
           (d) For individuals with two or more qualifying children, 
        the credit equals ten percent of the first $9,390 $9,720 of 
        earned income and 20 percent of earned income 
        over $14,350 $14,860 but less than $16,230 $16,800.  The credit 
        is reduced by 10.3 percent of earned income or modified adjusted 
        gross income, whichever is greater, in excess 
        of $17,280 $17,890, 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. 
           Sec. 39.  Minnesota Statutes 2000, section 290.0671, 
        subdivision 7, is amended to read: 
           Subd. 7.  [INFLATION ADJUSTMENT.] The earned income amounts 
        used to calculate the credit and the income thresholds at which 
        the maximum credit begins to be reduced in subdivision 1 must be 
        adjusted for inflation.  The commissioner shall adjust the 
        earned income and threshold amounts by the percentage determined 
        under section 290.06, subdivision 2d, for the taxable year. make 
        the inflation adjustments in accordance with section 1f of the 
        Internal Revenue Code except that for the purposes of this 
        subdivision the percentage increase shall be determined from the 
        year starting September 1, 1999, and ending August 31, 2000, as 
        the base year for adjusting for inflation for the tax year 
        beginning after December 31, 2000.  The determination of the 
        commissioner under this subdivision is not a rule under the 
        Administrative Procedures Act. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2000. 
           Sec. 40.  Minnesota Statutes 2000, 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, to the 
        extent included in Minnesota taxable income: 
           (1) earned income as defined in section 32(c)(2) of the 
        Internal Revenue Code; 
           (2) to the extent included in 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, 2000. 
           Sec. 41.  Minnesota Statutes 2000, 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 the difference between the tax on the 
        couple's joint Minnesota taxable income under the rates in 
        section 290.06, subdivision 2c, paragraph (a), and the sum of 
        the tax under the rates of section 290.06, subdivision 2c, 
        paragraph (b), on the earned income of the lesser-earning 
        spouse, and the tax under the rates of section 290.06, 
        subdivision 2c, paragraph (b), on the couple's joint Minnesota 
        taxable income, minus the earned income of the lesser-earning 
        spouse. 
                                     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, 2001, the 
        commissioner of revenue shall prepare and make available to 
        taxpayers a comprehensive table showing the credit under this 
        section at brackets of earnings of the lesser-earning spouse and 
        joint taxable income.  The brackets of earnings shall not be 
        more than $2,000. 
           For taxable years beginning after December 31, 2000 2002, 
        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, 2000. 
           Sec. 42.  Minnesota Statutes 2000, section 290.0921, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
        "Alternative minimum taxable income" is Minnesota net income as 
        defined in section 290.01, subdivision 19, and includes the 
        adjustments and tax preference items in sections 56, 57, 58, and 
        59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
        corporation files a separate company Minnesota tax return, the 
        minimum tax must be computed on a separate company basis.  If a 
        corporation is part of a tax group filing a unitary return, the 
        minimum tax must be computed on a unitary basis.  The following 
        adjustments must be made. 
           (1) For purposes of the depreciation adjustments under 
        section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
        the basis for depreciable property placed in service in a 
        taxable year beginning before January 1, 1990, is the adjusted 
        basis for federal income tax purposes, including any 
        modification made in a taxable year under section 290.01, 
        subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
        subdivision 7, paragraph (c). 
           For taxable years beginning after December 31, 2000, the 
        amount of any remaining modification made under section 290.01, 
        subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
        subdivision 7, paragraph (c), not previously deducted is a 
        depreciation allowance in the first taxable year after December 
        31, 2000. 
           (2) The alternative tax net operating loss deduction under 
        sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
        not apply. 
           (3) The special rule for certain dividends under section 
        56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 
           (4) The special rule for dividends from section 936 
        companies under section 56(g)(4)(C)(iii) does not apply. 
           (5) The tax preference for depletion under section 57(a)(1) 
        of the Internal Revenue Code does not apply. 
           (6) The tax preference for intangible drilling costs under 
        section 57(a)(2) of the Internal Revenue Code must be calculated 
        without regard to subparagraph (E) and the subtraction under 
        section 290.01, subdivision 19d, clause (4). 
           (7) The tax preference for tax exempt interest under 
        section 57(a)(5) of the Internal Revenue Code does not apply.  
           (8) The tax preference for charitable contributions of 
        appreciated property under section 57(a)(6) of the Internal 
        Revenue Code does not apply. 
           (9) For purposes of calculating the tax preference for 
        accelerated depreciation or amortization on certain property 
        placed in service before January 1, 1987, under section 57(a)(7) 
        of the Internal Revenue Code, the deduction allowable for the 
        taxable year is the deduction allowed under section 290.01, 
        subdivision 19e. 
           For taxable years beginning after December 31, 2000, the 
        amount of any remaining modification made under section 290.01, 
        subdivision 19e, not previously deducted is a depreciation or 
        amortization allowance in the first taxable year after December 
        31, 2000. 
           (10) For purposes of calculating the adjustment for 
        adjusted current earnings in section 56(g) of the Internal 
        Revenue Code, the term "alternative minimum taxable income" as 
        it is used in section 56(g) of the Internal Revenue Code, means 
        alternative minimum taxable income as defined in this 
        subdivision, determined without regard to the adjustment for 
        adjusted current earnings in section 56(g) of the Internal 
        Revenue Code. 
           (11) For purposes of determining the amount of adjusted 
        current earnings under section 56(g)(3) of the Internal Revenue 
        Code, no adjustment shall be made under section 56(g)(4) of the 
        Internal Revenue Code with respect to (i) the amount of foreign 
        dividend gross-up subtracted as provided in section 290.01, 
        subdivision 19d, clause (1), (ii) the amount of refunds of 
        income, excise, or franchise taxes subtracted as provided in 
        section 290.01, subdivision 19d, clause (10), or (iii) the 
        amount of royalties, fees or other like income subtracted as 
        provided in section 290.01, subdivision 19d, clause (11). 
           Items of tax preference must not be reduced below zero as a 
        result of the modifications in this subdivision. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 43.  Minnesota Statutes 2000, section 290.92, 
        subdivision 23, is amended to read: 
           Subd. 23.  [WITHHOLDING BY EMPLOYER OF DELINQUENT TAXES.] 
        (1) The commissioner may, within five years after the date of 
        assessment of the tax, or if a lien has been filed under section 
        270.69, within the statutory period for enforcement of the lien, 
        give notice to any employer deriving income which has a taxable 
        situs in this state regardless of whether the income is exempt 
        from taxation, that an employee of that employer is delinquent 
        in a certain amount with respect to any state taxes, including 
        penalties, interest, and costs.  The commissioner can proceed 
        under this subdivision only if the tax is uncontested or if the 
        time for appeal of the tax has expired.  The commissioner shall 
        not proceed under this subdivision until the expiration of 30 
        days after mailing to the taxpayer, at the taxpayer's last known 
        address, a written notice of (a) the amount of taxes, interest, 
        and penalties due from the taxpayer and demand for their 
        payment, and (b) the commissioner's intention to require 
        additional withholding by the taxpayer's employer pursuant to 
        this subdivision.  The effect of the notice shall expire 180 
        days one year after it has been mailed to the taxpayer provided 
        that the notice may be renewed by mailing a new notice which is 
        in accordance with this subdivision.  The renewed notice shall 
        have the effect of reinstating the priority of the original 
        claim.  The notice to the taxpayer shall be in substantially the 
        same form as that provided in section 571.72.  The notice shall 
        further inform the taxpayer of the wage exemptions contained in 
        section 550.37, subdivision 14.  If no statement of exemption is 
        received by the commissioner within 30 days from the mailing of 
        the notice, the commissioner may proceed under this 
        subdivision.  The notice to the taxpayer's employer may be 
        served by mail or by delivery by an employee of the department 
        of revenue and shall be in substantially the same form as 
        provided in section 571.75.  Upon receipt of notice, the 
        employer shall withhold from compensation due or to become due 
        to the employee, the total amount shown by the notice, subject 
        to the provisions of section 571.922.  The employer shall 
        continue to withhold each pay period until the notice is 
        released by the commissioner under section 270.709.  Upon 
        receipt of notice by the employer, the claim of the state of 
        Minnesota shall have priority over any subsequent garnishments 
        or wage assignments.  The commissioner may arrange between the 
        employer and the employee for withholding a portion of the total 
        amount due the employee each pay period, until the total amount 
        shown by the notice plus accrued interest has been withheld.  
           The "compensation due" any employee is defined in 
        accordance with the provisions of section 571.921.  The maximum 
        withholding allowed under this subdivision for any one pay 
        period shall be decreased by any amounts payable pursuant to a 
        garnishment action with respect to which the employer was served 
        prior to being served with the notice of delinquency and any 
        amounts covered by any irrevocable and previously effective 
        assignment of wages; the employer shall give notice to the 
        department of the amounts and the facts relating to such 
        assignments within ten days after the service of the notice of 
        delinquency on the form provided by the department of revenue as 
        noted in this subdivision.  
           (2) If the employee ceases to be employed by the employer 
        before the full amount set forth in a notice of delinquency plus 
        accrued interest has been withheld, the employer shall 
        immediately notify the commissioner in writing of the 
        termination date of the employee and the total amount withheld.  
        No employer may discharge any employee by reason of the fact 
        that the commissioner has proceeded under this subdivision.  If 
        an employer discharges an employee in violation of this 
        provision, the employee shall have the same remedy as provided 
        in section 571.927, subdivision 2.  
           (3) Within ten days after the expiration of such pay 
        period, the employer shall remit to the commissioner, on a form 
        and in the manner prescribed by the commissioner, the amount 
        withheld during each pay period under this subdivision.  
           (4) Clauses (1), (2), and (3), except provisions imposing a 
        liability on the employer for failure to withhold or remit, 
        shall apply to cases in which the employer is the United States 
        or any instrumentality thereof or this state or any municipality 
        or other subordinate unit thereof.  
           (5) The commissioner shall refund to the employee excess 
        amounts withheld from the employee under this subdivision.  If 
        any excess results from payments by the employer because of 
        willful failure to withhold or remit as prescribed in clause 
        (3), the excess attributable to the employer's payment shall be 
        refunded to the employer.  
           (6) Employers required to withhold delinquent taxes, 
        penalties, interest, and costs under this subdivision shall not 
        be required to compute any additional interest, costs or other 
        charges to be withheld.  
           (7) The collection remedy provided to the commissioner by 
        this subdivision shall have the same legal effect as if it were 
        a levy made pursuant to section 270.70.  
           [EFFECTIVE DATE.] This section is effective for notices of 
        intent mailed on or after the day following final enactment. 
           Sec. 44.  Minnesota Statutes 2000, section 290A.03, 
        subdivision 12, is amended to read: 
           Subd. 12.  [GROSS RENT.] (a) "Gross rent" means rental paid 
        for the right of occupancy, at arms-length, of a homestead, 
        exclusive of charges for any medical services furnished by the 
        landlord as a part of the rental agreement, whether expressly 
        set out in the rental agreement or not. 
           (b) The gross rent of a resident of a nursing home or 
        intermediate care facility is $350 per month.  The gross rent of 
        a resident of an adult foster care home is $550 per month.  
        Beginning for rent paid in 2002, the commissioner shall annually 
        adjust for inflation the gross rent amounts stated in this 
        paragraph.  The adjustment must be made in accordance with 
        section 1f of the Internal Revenue Code, except that for 
        purposes of this paragraph the percentage increase shall be 
        determined from the year ending on June 30, 2001, to the year 
        ending on June 30 of the year in which the rent is paid.  The 
        commissioner shall round the gross rents to the nearest $10 
        amount.  If the amount ends in $5, the commissioner shall round 
        it up to the next $10 amount.  The determination of the 
        commissioner under this paragraph is not a rule under the 
        Administrative Procedure Act. 
           (c) If the landlord and tenant have not dealt with each 
        other at arms-length and the commissioner determines that the 
        gross rent charged was excessive, the commissioner may adjust 
        the gross rent to a reasonable amount for purposes of this 
        chapter. 
           (d) Any amount paid by a claimant residing in property 
        assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 
        for occupancy in that property shall be excluded from gross rent 
        for purposes of this chapter.  However, property taxes imputed 
        to the homestead of the claimant or the dwelling unit occupied 
        by the claimant that qualifies for homestead treatment pursuant 
        to section 273.124, subdivision 3, 4, 5, or 6 shall be included 
        within the term "property taxes payable" as defined in 
        subdivision 13, notwithstanding the fact that ownership is not 
        in the name of the claimant. 
           [EFFECTIVE DATE.] This section is effective for refunds 
        based on rent paid after December 31, 2000. 
           Sec. 45.  Minnesota Statutes 2000, section 290A.15, is 
        amended to read: 
           290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 
           The amount of any claim otherwise payable under this 
        chapter may be applied by the commissioner against any 
        delinquent tax liability of the claimant or spouse of the 
        claimant payable to the department of revenue any member of the 
        household.  If there are two members of the household, the 
        commissioner may apply only one-half of a refund to the separate 
        liability of either member of the household. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        refunds paid on or after August 1, 2001. 
           Sec. 46.  Minnesota Statutes 2000, section 296A.16, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FUEL USED IN OTHER VEHICLE; CLAIM FOR REFUND.] 
        Any person who shall buy buys and use uses gasoline for a 
        qualifying purpose other than use in motor vehicles, snowmobiles 
        except as provided in clause (2), or motorboats, or special fuel 
        for a qualifying purpose other than use in licensed motor 
        vehicles, and who shall have paid the tax directly or indirectly 
        through the amount of the tax being included in the price of the 
        gasoline or special fuel, or otherwise, shall be reimbursed and 
        repaid the amount of the tax paid upon filing with the 
        commissioner a claim for refund in the form and manner 
        prescribed by the commissioner, and containing the information 
        the commissioner shall require.  By signing any such claim which 
        is false or fraudulent, the applicant shall be subject to the 
        penalties provided in this chapter for knowingly making a false 
        claim.  The claim shall set forth the total amount of the 
        gasoline so purchased and used by the applicant other than in 
        motor vehicles, or special fuel purchased and used by the 
        applicant other than in licensed motor vehicles, and shall state 
        when and for what purpose it was used.  When a claim contains an 
        error in computation or preparation, the commissioner is 
        authorized to adjust the claim in accordance with the evidence 
        shown on the claim or other information available to the 
        commissioner.  The commissioner, on being satisfied that the 
        claimant is entitled to the payments, shall approve the claim 
        and transmit it to the commissioner of finance.  The words 
        "gasoline" or "special fuel" as used in this subdivision do not 
        include aviation gasoline or special fuel for aircraft.  
        Gasoline or special fuel bought and used for a "qualifying 
        purpose" means: 
           (1) Gasoline or special fuel used in carrying on a trade or 
        business, used on a farm situated in Minnesota, and used for a 
        farming purpose.  "Farm" and "farming purpose" have the meanings 
        given them in section 6420(c)(2), (3), and (4) of the Internal 
        Revenue Code of 1986, as amended through December 31, 1997. 
           (2) Gasoline or special fuel used for off-highway business 
        use.  "Off-highway business use" means any use off the public 
        highway by a person in that person's trade, business, or 
        activity for the production of income.  Off-highway business use 
        includes: 
           (i) use of a passenger snowmobile off the public highways 
        as part of the operations of a resort as defined in section 
        157.15, subdivision 11; and 
           (ii) use of gasoline or special fuel to operate a power 
        takeoff unit on a vehicle, but not including fuel consumed 
        during idling time.  
        Off-highway business use does not include: 
           (i) use as a fuel in a motor vehicle which, at the time of 
        use, is registered or is required to be registered for highway 
        use under the laws of any state or foreign country; or 
           (ii) use of a licensed motor vehicle fuel tank in lieu of a 
        separate storage tank for storing fuel to be used for a 
        qualifying purpose, as defined in this section.  Fuel purchased 
        to be used for a qualifying purpose cannot be placed in the fuel 
        tank of a licensed motor vehicle and must be stored in a 
        separate supply tank. 
           (3) Gasoline or special fuel placed in the fuel tanks of 
        new motor vehicles, manufactured in Minnesota, and shipped by 
        interstate carrier to destinations in other states or foreign 
        countries.  
           By July 1, 1998, the commissioner shall adopt rules that 
        determine the rates and percentages necessary to develop 
        formulas for calculating the refund under clause (2), item (ii). 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 47.  [296A.201] [ASSESSMENTS.] 
           Subdivision 1.  [GENERAL RULE.] The commissioner may make 
        determinations, corrections, and assessments with respect to any 
        tax or fee under this chapter, including interest, additions to 
        taxes and fees, and assessable penalties. 
           Subd. 2.  [COMMISSIONER FILED RETURNS.] 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 is prima facie 
        correct and valid.  The commissioner may use statistical or 
        other sampling techniques consistent with generally accepted 
        auditing standards in examining returns or records and making 
        assessments. 
           Subd. 3.  [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 
        TAXPAYER.] (a) If a return has been filed and the commissioner 
        determines that the tax or fee disclosed by the return is 
        different than the tax or fee determined by the examination, the 
        commissioner shall send an order of assessment to the taxpayer.  
        If no return has been filed, the commissioner may make a return 
        for the taxpayer under subdivision 2 or may send an order of 
        assessment under this subdivision.  The order must explain the 
        basis for the assessment and must explain the taxpayer's appeal 
        rights.  An order of assessment is final when made but may be 
        reconsidered by the commissioner under section 296A.25. 
           (b) Penalties under this chapter are not imposed and no 
        collection action can be taken, including the filing of liens 
        under section 270.69, if the amount shown on the order is paid 
        to the commissioner: 
           (1) within 60 days after notice of the amount and demand 
        for its payment have been mailed to the taxpayer by the 
        commissioner; or 
           (2) if an administrative appeal is filed under this 
        chapter, or a tax court appeal is filed under chapter 271, 
        within 60 days following final determination of the appeal if 
        the appeal is based upon a constitutional challenge to the tax 
        or fee, and if not, when the decision of the tax court is made. 
           Subd. 4.  [ERRONEOUS REFUNDS.] An erroneous refund is 
        considered an underpayment of tax or fee on the date made.  An 
        assessment of a deficiency arising out of an erroneous refund 
        may be made at any time within two years from the making of the 
        refund.  If part of the refund was induced by fraud or 
        misrepresentation of a material fact, the assessment may be made 
        at any time. 
           Subd. 5.  [ASSESSMENT PRESUMED VALID.] A return or 
        assessment of tax or fee made by the commissioner is prima facie 
        correct and valid.  The taxpayer has the burden of establishing 
        its incorrectness or invalidity in any related action or 
        proceeding. 
           Subd. 6.  [AGGREGATE REFUND OR ASSESSMENT.] The 
        commissioner, on examining returns of a taxpayer for more than 
        one year or period, may issue one order covering the period 
        under examination that reflects the aggregate refund or 
        additional tax or fee due. 
           Subd. 7.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
        sent postage prepaid by United States mail to the taxpayer at 
        the taxpayer's last known address, is sufficient even if the 
        taxpayer is deceased or is under a legal disability, or, in the 
        case of a corporation, even if the corporation has terminated 
        its existence, unless the department has been provided with a 
        new address by a party authorized to receive notices of 
        assessment. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 48.  Minnesota Statutes 2000, section 296A.21, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL RULE RULES.] (a) The commissioner 
        shall make determinations, corrections, and assessments, and 
        refunds with respect to taxes and fees under this chapter, 
        including interest, additions to taxes, and assessable 
        penalties.  Except as otherwise provided in this section, the 
        amount of taxes assessable must be assessed within 3-1/2 years 
        after the date the return is filed. 
           (b) A claim for a refund of an overpayment of state tax or 
        fees must be filed within 3-1/2 years from the date prescribed 
        for filing the return, plus any extension of time granted for 
        filing the return, but only if filed within the extended time; 
        or the claim must be filed within one year from the date of an 
        order assessing tax or fees, or from the date of a return filed 
        by the commissioner, upon payment in full of the tax, fees, 
        penalties, and interest shown on the order or return, whichever 
        period expires later. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 49.  Minnesota Statutes 2000, section 296A.21, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TIME LIMIT FOR REPAYMENT CERTAIN REFUNDS.] No 
        repayment Notwithstanding subdivision 1, paragraph (b), no 
        refund under section 296A.16, subdivision 2, shall be made 
        unless the claim for refund and invoice shall be are filed with 
        the commissioner within one year from the date of purchase.  The 
        postmark on the envelope in which a written claim is mailed 
        shall determine its date of filing. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 50.  Minnesota Statutes 2000, section 297A.07, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NEW PERMITS AFTER REVOCATION.] The commissioner 
        shall not issue a new permit or reinstate a revoked permit after 
        revocation unless the taxpayer applies for a permit and provides 
        reasonable evidence of intention to comply with the sales and 
        use tax laws and rules.  The commissioner may require the 
        applicant to supply security, in addition to that authorized by 
        section 297A.28, as is reasonably necessary to insure compliance 
        with the sales and use tax laws and rules.  If the commissioner 
        issues or reinstates a permit not in conformance with the 
        requirements of this subdivision or applicable rules, the 
        commissioner may cancel the permit upon notice to the permit 
        holder.  The notice must be served by first class and certified 
        mail at the permit holder's last known address.  The 
        cancellation shall be effective immediately, subject to the 
        right of the permit holder to show that the permit was issued in 
        conformance with the requirements of this subdivision and 
        applicable rules.  Upon such showing, the permit must be 
        reissued. 
           If a taxpayer has had a permit or permits revoked three 
        times in a five-year period, the commissioner shall not issue a 
        new permit or reinstate the revoked permit until 24 months have 
        elapsed after revocation and the taxpayer has satisfied the 
        conditions for reinstatement of a revoked permit or issuance of 
        a new permit imposed by this section and rules adopted hereunder.
           For purposes of this subdivision, the term "taxpayer" means 
        an individual, if a revoked permit was issued to or in the name 
        of an individual, or a corporation or partnership, if a revoked 
        permit was issued to or in the name of a corporation or 
        partnership.  Taxpayer also means an officer of a corporation, a 
        member of a partnership, or an individual who is liable for 
        delinquent sales taxes, either for the entity for which the new 
        or reinstated permit is at issue, or for another entity for 
        which a permit was previously revoked, or personally as a permit 
        holder. 
           [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] (a) This section 
        is effective the day following final enactment.  
           (b) In the next edition of Minnesota Statutes, the revisor 
        shall codify the amendments to this section in Minnesota 
        Statutes, section 297A.86, subdivision 2. 
           Sec. 51.  Minnesota Statutes 2000, section 297A.25, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MEDICINES; MEDICAL DEVICES.] The gross receipts 
        from the sale of and storage, use, or consumption of prescribed 
        drugs, prescribed medicine and insulin, intended for use, 
        internal or external, in the cure, mitigation, treatment or 
        prevention of illness or disease in human beings are exempt, 
        together with prescription glasses, fever thermometers, 
        therapeutic, and prosthetic devices.  "Prescribed drugs" or 
        "prescribed medicine" includes over-the-counter drugs or 
        medicine prescribed by a licensed physician health care 
        professional.  "Therapeutic devices" includes reusable finger 
        pricking devices for the extraction of blood, blood glucose 
        monitoring machines, and other diagnostic agents used in 
        diagnosing, monitoring, or treating diabetes.  Nonprescription 
        analgesics consisting principally (determined by the weight of 
        all ingredients) of acetaminophen, acetylsalicylic acid, 
        ibuprofen, ketoprofen, naproxen, and other nonprescription 
        analgesics that are approved by the United States Food and Drug 
        Administration for internal use by human beings, or a 
        combination thereof, are exempt. 
           Medical supplies purchased by a licensed health care 
        facility or licensed health care professional to provide medical 
        treatment to residents or patients are exempt.  The exemption 
        does not apply to medical equipment or components of medical 
        equipment, laboratory supplies, radiological supplies, and other 
        items used in providing medical services.  For purposes of this 
        subdivision, "medical supplies" means adhesive and nonadhesive 
        bandages, gauze pads and strips, cotton applicators, 
        antiseptics, nonprescription drugs, eye solution, and other 
        similar supplies used directly on the resident or patient in 
        providing medical services. 
           [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 
        effective the day following final enactment.  In the next 
        edition of Minnesota Statutes, the revisor of statutes shall 
        codify the amendment in this section in Minnesota Statutes, 
        section 297A.67, subdivision 7. 
           Sec. 52.  Minnesota Statutes 2000, 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 of tangible personal 
        property and taxable services used at or by the hospitals and 
        nursing homes 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; INSTRUCTION TO REVISOR.] This section is 
        effective the day following final enactment.  In the next 
        edition of Minnesota Statutes, the revisor of statutes shall 
        codify the amendment in this section in Minnesota Statutes, 
        section 297A.70, subdivision 2. 
           Sec. 53.  Minnesota Statutes 2000, section 297A.82, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PAYMENT OF TAX TO COMMISSIONER.] If the an 
        aircraft is purchased from a person who is not the holder of a 
        valid sales and use tax permit under this chapter, the purchaser 
        shall pay the tax to the commissioner of revenue prior to 
        registering or licensing the aircraft in this state.  The 
        commissioner of revenue shall issue a certificate stating that 
        the sales and use tax in respect to the transaction has been 
        paid. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases occurring after the day following final enactment. 
           Sec. 54.  Minnesota Statutes 2000, section 297A.82, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [AGREEMENT WITH COMMISSIONER OF 
        TRANSPORTATION.] Notwithstanding subdivisions 1 to 4, the 
        commissioner may enter into an agreement with the commissioner 
        of transportation whereby, upon approval of both commissioners, 
        the commissioner of transportation will collect the sales tax on 
        aircraft from persons required to register or license aircraft 
        in this state.  For purposes of collecting the tax, the 
        commissioner of transportation shall act as agent of the 
        commissioner of revenue and shall be subject to all rules not 
        inconsistent with the provisions of this chapter, that may be 
        prescribed by the commissioner. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 55.  Minnesota Statutes 2000, 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 or country 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 and 
        the motor vehicle was registered in the person's name in the 
        other state or country; 
           (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, 355, 368, 721, 731, 1031, 1033, or 
        1563(a) of the Internal Revenue Code of 1986, as amended through 
        December 31, 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, except a public school, university, or library, 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 the day 
        following final enactment, except that the change to paragraph 
        (11) is effective for sales and purchases occurring after June 
        30, 2000. 
           Sec. 56.  Minnesota Statutes 2000, section 297F.16, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 
        refund or credit is considered an underpayment of tax on the 
        date made.  An assessment of a deficiency arising out of an 
        erroneous refund or credit must be made within 3-1/2 years from 
        the date prescribed for filing the return, plus any extension of 
        time granted for filing the return, but only if filed within the 
        extended time, or two years from the time the tax is paid in 
        full, whichever period expires later two years from the making 
        of the refund.  If part of the refund was induced by fraud or 
        misrepresentation of a material fact, the assessment may be made 
        at any time. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 57.  Minnesota Statutes 2000, section 297G.15, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 
        refund or credit is considered an underpayment of tax on the 
        date made.  An assessment of a deficiency arising out of an 
        erroneous refund or credit must be made within 3-1/2 years from 
        the date prescribed for filing the return, plus any extension of 
        time granted for filing the return, but only if filed within the 
        extended time, or two years from the time the tax is paid in 
        full, whichever period expires later two years from the making 
        of the refund.  If part of the refund was induced by fraud or 
        misrepresentation of a material fact, the assessment may be made 
        at any time. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 58.  Minnesota Statutes 2000, section 297G.16, 
        subdivision 5, is amended to read: 
           Subd. 5.  [TIME LIMIT FOR REFUNDS.] Unless otherwise 
        provided in this chapter, a claim for a refund of an overpayment 
        of tax must be filed within 3-1/2 years from the date prescribed 
        for filing the return, plus any extension of time granted for 
        filing the return, but only if filed within the extended time, 
        or two years from the time the tax is paid in full, whichever 
        period expires later.  Claimants under this section are subject 
        to the notice requirements of section 289A.38, subdivision 7 or 
        within one year from the date of an order assessing tax or from 
        the date of a return filed by the commissioner, upon payment in 
        full of the tax, penalties, and interest shown on the order or 
        return made by the commissioner, whichever period expires later. 
           [EFFECTIVE DATE.] This section is effective for returns 
        becoming due or orders assessing tax issued on or after the day 
        following final enactment. 
           Sec. 59.  Minnesota Statutes 2000, section 297G.16, 
        subdivision 7, is amended to read: 
           Subd. 7.  [TIME LIMIT FOR A BAD DEBT DEDUCTION.] Claims for 
        refund must be filed with the commissioner within one year of 
        the filing of the taxpayer's income tax return containing the 
        bad debt deduction that is being claimed.  Claimants under this 
        subdivision are subject to the notice requirements of section 
        289A.38, subdivision 7. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 60.  [297H.115] [USE TAX.] 
           Subdivision 1.  [IMPOSITION; LIABILITY OF GENERATORS AND 
        SELF-HAULERS.] (a) A use tax is imposed on the sales price of 
        mixed municipal solid waste management services received by a 
        residential generator at the rate imposed under section 297H.02, 
        unless the tax imposed under section 297H.02 was paid.  The 
        residential generator is liable. 
           (b) A use tax is imposed on the sales price of mixed 
        municipal solid waste management services received by a 
        commercial generator at the rate imposed under section 297H.03, 
        unless the tax imposed under section 297H.03 was paid.  The 
        commercial generator is liable. 
           (c) A use tax is imposed on the volume of nonmixed 
        municipal solid waste that is managed at the rate imposed under 
        section 297H.04, unless the tax imposed under section 297H.04 
        was paid.  The generator is liable. 
           (d) A use tax is imposed on the sales price of mixed 
        municipal solid waste management services received by a 
        self-hauler at the rate imposed under section 297H.05, paragraph 
        (a), unless the tax imposed under section 297H.05, paragraph 
        (a), was paid.  The self-hauler is liable. 
           (e) A use tax is imposed on the volume of nonmixed 
        municipal solid waste managed at the rate imposed under section 
        297H.05, paragraph (b), unless the tax imposed under section 
        297H.05, paragraph (b), was paid.  The self-hauler is liable. 
           Subd. 2.  [PAYMENT; REPORTING.] A generator or self-hauler 
        that is liable under subdivision 1 shall report the use tax on a 
        return prescribed by the commissioner of revenue, and shall 
        remit the tax with the return.  The return and the tax must be 
        filed using the filing cycle and due dates provided for taxes 
        imposed under chapter 297A. 
           Subd. 3.  [COMMISSIONER ASSESSMENT.] (a) The commissioner 
        of revenue may not assess the generator or self-hauler a use tax 
        on a transaction for which the waste management service provider 
        has paid the solid waste management tax, except as provided in 
        paragraph (b). 
           (b) If the waste management service provider who is an 
        accrual basis taxpayer remits a payment and thereafter offsets 
        the amount as a bad debt under section 297H.09, the commissioner 
        of revenue may assess the generator or self-hauler a use tax for 
        the offset amount. 
           [EFFECTIVE DATE.] This section is effective for services 
        received on or after August 1, 2001. 
           Sec. 61.  Minnesota Statutes 2000, section 383A.80, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORITY TO IMPOSE; RATE.] (a) The 
        governing body of Ramsey county may impose a mortgage registry 
        and deed tax. 
           (b) The rate of the mortgage registry tax equals one cent 
        for each $100 or fraction .0001 of the principal. 
           (c) The rate of the deed tax equals five cents for each 
        $500 or fraction .0001 of the amount. 
           [EFFECTIVE DATE.] This section is effective for documents 
        acknowledged and recorded after July 31, 2001. 
           Sec. 62.  Minnesota Statutes 2000, section 383B.80, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORITY TO IMPOSE; RATE.] (a) The 
        governing body of Hennepin county may impose a mortgage registry 
        and deed tax. 
           (b) The rate of the mortgage registry tax equals one cent 
        for each $100 or fraction .0001 of the principal. 
           (c) The rate of the deed tax equals five cents for each 
        $500 or fraction .0001 of the amount. 
           [EFFECTIVE DATE.] This section is effective for documents 
        acknowledged and recorded after July 31, 2001. 
           Sec. 63.  Minnesota Statutes 2000, section 461.12, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [NOTICE TO COMMISSIONER.] The licensing authority 
        under this section shall, within 30 days of the issuance of a 
        license, inform the commissioner of revenue of the licensee's 
        name, address, trade name, and the effective and expiration 
        dates of the license.  The commissioner of revenue must also be 
        informed of a license renewal, transfer, cancellation, 
        suspension, or revocation during the license period. 
           [EFFECTIVE DATE.] This section is effective for licenses 
        issued, renewed, transferred, canceled, suspended, or revoked on 
        or after January 1, 2002. 
           Sec. 64.  [REPORT ON INCOME TAX RECIPROCITY WITH 
        WISCONSIN.] 
           By March 1, 2002, the commissioner of revenue must report 
        to house and senate committees dealing with taxes on the 
        advisability of terminating individual income tax reciprocity 
        with the state of Wisconsin under Minnesota Statutes, section 
        290.081. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 65.  [APPROPRIATIONS.] 
           $462,000 is appropriated in each of fiscal years 2002 and 
        2003 from the general fund to the commissioner of revenue to 
        administer this article.  In addition, there is a one-time 
        appropriation of $41,000 in fiscal year 2002, and a one-time 
        appropriation of $43,000 in fiscal year 2003, from the general 
        fund to the commissioner of revenue to administer this article. 
           Sec. 66.  [REPEALER.] 
           (a) Minnesota Statutes 2000, section 296A.16, subdivision 
        6, is repealed effective the day following final enactment. 
           (b) Minnesota Statutes 2000, sections 290.095, subdivision 
        7; 290.23; 290.25; and 290.31, subdivisions 2, 2a, 3, 4, 5, and 
        19, are repealed effective for tax years beginning after 
        December 31, 2000. 
           (c) Minnesota Statutes 2000, section 297B.032, is repealed 
        effective the day following final enactment. 
           (d) Minnesota Statutes 2000, sections 290.06, subdivision 
        25, and 290A.04, subdivision 2j, are repealed effective for 
        taxable years beginning after December 31, 2001. 
           (e)  Minnesota Rules, parts 8120.0200; 8120.0500; 
        8120.0700; 8120.0900; 8120.1300; 8120.1600; 8120.2000; 
        8120.2100; 8120.2200; 8120.2300; 8120.2500; 8120.2700; 
        8120.2800; 8120.3000; 8120.3200; 8120.4300; 8120.4400; 
        8120.4500; 8120.4600; 8120.4900; 8120.5000; 8120.5100; and 
        8120.5300, are repealed effective the day following final 
        enactment. 

                                   ARTICLE 8 
                        SUSTAINABLE FOREST INCENTIVE ACT
           Section 1.  Minnesota Statutes 2000, section 88.49, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CANCELLATION.] Upon the failure of the owner 
        faithfully to fulfill and perform such contract or any provision 
        thereof, or any requirement of sections 88.47 to 88.53, or any 
        rule adopted by the commissioner thereunder, the commissioner 
        may cancel the contract in the manner herein provided.  The 
        commissioner shall give to the owner, in the manner prescribed 
        in section 88.48, subdivision 4, 60 days' notice of a hearing 
        thereon at which the owner may appear and show cause, if any, 
        why the contract should not be canceled.  The commissioner shall 
        thereupon determine whether the contract should be canceled and 
        make an order to that effect.  Notice of the commissioner's 
        determination and the making of the order shall be given to the 
        owner in the manner provided in section 88.48, subdivision 4.  
        On determining that the contract should be canceled and no 
        appeal therefrom be taken, the commissioner shall send notice 
        thereof to the auditor of the county and to the town clerk of 
        the town affected and file with the recorder a certified copy of 
        the order, who shall forthwith note the cancellation upon the 
        record thereof, and thereupon the land therein described shall 
        cease to be an auxiliary forest and, together with the timber 
        thereon, become liable to all taxes and assessments that 
        otherwise would have been levied against it had it never been an 
        auxiliary forest from the time of the making of the contract, 
        any provisions of the statutes of limitation to the contrary 
        notwithstanding, less the amount of taxes paid under the 
        provisions of section 88.51, subdivision 1, together with 
        interest on such taxes and assessments at six percent per annum, 
        but without penalties. 
           The commissioner may in like manner and with like effect 
        cancel the contract upon written application of the owner. 
           The commissioner shall cancel any contract if the owner has 
        made successful application under sections 270.31 to 270.39 
        inclusive 290C.01 to 290C.11, the Minnesota Tree Growth Tax Law 
        Sustainable Forest Incentive Act, and has paid to the county 
        treasurer the difference between the amount which would have 
        been paid had the land under contract been subject to the 
        Minnesota Tree Growth Tax Law and the Sustainable Forest 
        Incentive Act from the date of the filing of the contract and 
        the amount actually paid under section 88.51, subdivisions 1 and 
        2.  This tax difference must be calculated based on the years 
        the lands would have been taxed under the Tree Growth Tax Law 
        and the Sustainable Forest Incentive Act.  The sustainable 
        forest tax difference is net of the incentive payment of section 
        290C.07.  If the amount which would have been paid, had the land 
        under contract been under the Minnesota Tree Growth Tax Law and 
        the Sustainable Forest Incentive Act from the date of the filing 
        of the contract, is less than the amount actually paid under the 
        contract, the cancellation shall be made without further payment 
        by the owner. 
           When the execution of any contract creating an auxiliary 
        forest shall have been procured through fraud or deception 
        practiced upon the county board or the commissioner or any other 
        person or body representing the state, it may be canceled upon 
        suit brought by the attorney general at the direction of the 
        commissioner.  This cancellation shall have the same effect as 
        the cancellation of a contract by the commissioner. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 2.  Minnesota Statutes 2000, section 88.49, 
        subdivision 9a, is amended to read: 
           Subd. 9a.  [LAND TRADES WITH GOVERNMENTAL UNITS.] 
        Notwithstanding subdivisions 6 and 9, or section 88.491, 
        subdivision 2, if an owner trades land under auxiliary forest 
        contract for land owned by a governmental unit and the owner 
        agrees to use the land received in trade from the governmental 
        unit for the production of forest products, upon resolution of 
        the county board, no taxes and assessments shall be levied 
        against the land traded, except that any current or delinquent 
        annual taxes or yield taxes due on that land while it was under 
        the auxiliary forest provision must be paid prior to the land 
        exchange.  The land received from the governmental unit in the 
        land trade automatically qualifies for inclusion in the Tree 
        Growth Tax Law Sustainable Forest Incentive Act. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 3.  Minnesota Statutes 2000, section 88.491, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EFFECT OF EXPIRED CONTRACT.] When auxiliary 
        forest contracts expire, or prior to expiration by mutual 
        agreement between the land owner and the appropriate county 
        office, the lands previously covered by an auxiliary forest 
        contract automatically qualify for inclusion in the Tree Growth 
        Tax Law under the provisions of the Sustainable Forest Incentive 
        Act; provided that when such lands are included in the Tree 
        Growth Tax Law Sustainable Forest Incentive Act prior to 
        expiration of the auxiliary forest contract they will be 
        transferred and a tax paid as provided in accordance with the 
        provisions of section 88.49, subdivision 5, upon application and 
        inclusion in the sustainable forest incentive program.  The land 
        owner shall pay taxes in an amount equal to the difference 
        between: 
           (1) the sum of: 
           (i) the amount which would have been paid from the date of 
        the filing of the contract had the land under contract been 
        subject to the Minnesota Tree Growth Tax Law from the date of 
        the filing of the contract and; plus 
           (ii) beginning with taxes payable in 2003, the taxes that 
        would have been paid if the land had been enrolled in the 
        sustainable forest incentive program; and 
           (2) the amount actually paid under section 88.51, 
        subdivisions 1 and 2. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 4.  Minnesota Statutes 2000, 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, or a sustainable forest tax payment to a claimant under 
        chapter 290C.  
           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 refunds in 
        2003 and thereafter. 
           Sec. 5.  [290C.01] [PURPOSE.] 
           It is the policy of this state to promote sustainable 
        forest resource management on the state's public and private 
        lands.  Recognizing that private forests comprise approximately 
        one-half of the state forest land resources, that healthy and 
        robust forest land provides significant benefits to the state of 
        Minnesota, and that ad valorem property taxes represent a 
        significant annual cost that can discourage long-term forest 
        management investments, this chapter, hereafter referred to as 
        the "Sustainable Forest Incentive Act," is enacted to encourage 
        the state's private forest landowners to make a long-term 
        commitment to sustainable forest management. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 6.  [290C.02] [DEFINITIONS.] 
           Subdivision 1.  [APPLICATION.] When used in sections 
        290C.01 to 290C.11, the terms in this section have the meanings 
        given them. 
           Subd. 2.  [APPROVED PLAN WRITERS.] "Approved plan writers" 
        are natural resource professionals who are self-employed, 
        employed by private companies or individuals, nonprofit 
        organizations, local units of government, or public agencies, 
        and who are approved by the commissioner of natural resources.  
        Persons determined to be certified foresters by the Society of 
        American Foresters shall be deemed to meet the standards 
        required under this subdivision.  The commissioner of natural 
        resources shall issue a unique identification number to each 
        approved planner. 
           Subd. 3.  [CLAIMANT.] "Claimant" means a person, as that 
        term is defined in section 290.01, subdivision 2, who owns 
        forest land in Minnesota and files an application authorized by 
        the Sustainable Forest Incentive Act.  No more than one claimant 
        is entitled to a payment under this chapter with respect to any 
        tract, parcel, or piece of land enrolled under this chapter.  
        When enrolled forest land is owned by two or more persons, the 
        owners must determine between them which person may claim the 
        payments provided under sections 290C.01 to 290C.11. 
           Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of revenue. 
           Subd. 5.  [CURRENT USE VALUE.] "Current use value" means 
        the statewide average annual income per acre, multiplied by 90 
        percent and divided by the capitalization rate determined under 
        subdivision 9.  The statewide net annual income shall be a 
        weighted average based on the most recent data as of July 1 of 
        the computation year on stumpage prices and annual tree growth 
        rates and acreage by cover type provided by the department of 
        natural resources and the United States Department of 
        Agriculture Forest Service North Central Research Station. 
           Subd. 6.  [FOREST LAND.] "Forest land" means land 
        containing a minimum of 20 contiguous acres for which the owner 
        has implemented a forest management plan that was prepared or 
        updated within the past ten years by an approved plan writer.  
        For purposes of this subdivision, acres are considered to be 
        contiguous even if they are separated by a road, waterway, 
        railroad track, or other similar intervening property.  At least 
        50 percent of the contiguous acreage must meet the definition of 
        forest land in section 88.01, subdivision 7.  For the purposes 
        of sections 290C.01 to 209C.11, forest land does not include (i) 
        land used for residential or agricultural purposes, (ii) land 
        enrolled in the reinvest in Minnesota program, a state or 
        federal conservation reserve or easement reserve program under 
        sections 103F.501 to 103F.531, the Minnesota agricultural 
        property tax law under section 273.111, or land subject to 
        agricultural land preservation controls or restrictions as 
        defined in section 40A.02 or under the Metropolitan Agricultural 
        Preserves Act under chapter 473H, or (iii) land improved with a 
        structure, pavement, sewer, campsite, or any road, other than a 
        township road, used for purposes not prescribed in the forest 
        management plan. 
           Subd. 7.  [FOREST MANAGEMENT PLAN.] "Forest management plan"
        means a written document providing a framework for site-specific 
        healthy, productive, and sustainable forest resources.  A forest 
        management plan must include at least the following:  (i) 
        owner-specific forest management goals for the property; (ii) a 
        reliable field inventory of the individual forest cover types, 
        their age, and density; (iii) a description of the soil type and 
        quality; (iv) an aerial photo and/or map of the vegetation and 
        other natural features of the property clearly indicating the 
        boundaries of the property and of the forest land; (v) the 
        proposed future conditions of the property; (vi) prescriptions 
        to meet proposed future conditions of the property; (vii) a 
        recommended timetable for implementing the prescribed 
        activities; and (viii) a legal description of the parcels 
        encompassing the parcels included in the plan.  All management 
        activities prescribed in a plan must be in accordance with the 
        recommended timber harvesting and forest management guidelines.  
        The commissioner of natural resources shall provide a framework 
        for plan content and updating and revising plans. 
           Subd. 8.  [TIMBER HARVESTING AND FOREST MANAGEMENT 
        GUIDELINES.] "Timber harvesting and forest management guidelines"
        means guidelines developed under section 89A.05 and adopted by 
        the Minnesota forest resources council in 1998. 
           Subd. 9.  [CAPITALIZATION RATE.] By July 1 of each year, 
        the commissioner shall determine a statewide capitalization rate 
        for use under this chapter.  The rate shall be the average 
        annual effective interest rate for St. Paul on new loans under 
        the Farm Credit Bank system calculated under section 
        2032A(e)(7)(A) of the Internal Revenue Code. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 7.  [290C.03] [ELIGIBILITY REQUIREMENTS.] 
           (a) Property may be enrolled in the sustainable forest 
        incentive program under this chapter if all of the following 
        conditions are met: 
           (1) property consists of at least 20 contiguous acres and 
        at least 50 percent of the land must meet the definition of 
        forest land in section 88.01, subdivision 7, during the 
        enrollment; 
           (2) a forest management plan for the property must be 
        prepared by an approved plan writer and implemented during the 
        period in which the land is enrolled; 
           (3) timber harvesting and forest management guidelines must 
        be used in conjunction with any timber harvesting or forest 
        management activities conducted on the land during the period in 
        which the land is enrolled; 
           (4) the property must be enrolled for a minimum of eight 
        years; 
           (5) there are no delinquent property taxes on the property; 
        and 
           (6) claimants enrolling more than 1,920 acres in the 
        sustainable forest incentive program must allow year-round, 
        nonmotorized access to fish and wildlife resources on enrolled 
        land except within one-fourth mile of a permanent dwelling or 
        during periods of high fire hazard as determined by the 
        commissioner of natural resources. 
           (b) Claimants required to allow access under paragraph (a), 
        clause (6), do not by that action: 
           (1) extend any assurance that the land is safe for any 
        purpose; 
           (2) confer upon the person the legal status of an invitee 
        or licensee to whom a duty of care is owed; or 
           (3) assume responsibility for or incur liability for any 
        injury to the person or property caused by an act or omission of 
        the person. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 8.  [290C.04] [APPLICATIONS.] 
           (a) A landowner may apply to enroll forest land for the 
        sustainable forest incentive program under this chapter.  The 
        claimant must complete, sign, and submit an application to the 
        commissioner by September 30 in order for the land to become 
        eligible beginning in the next year.  The application shall be 
        on a form prescribed by the commissioner and must include the 
        information the commissioner deems necessary.  At a minimum, the 
        application must show the following information for the land and 
        the claimant:  (i) the claimant's social security number or 
        state or federal business tax registration number and date of 
        birth, (ii) the claimant's address, (iii) the claimant's 
        signature, (iv) the county's parcel identification numbers for 
        the tax parcels that completely contain the claimant's forest 
        land that is sought to be enrolled, (v) the number of acres 
        eligible for enrollment in the program, (vi) the approved plan 
        writer's signature and identification number, and (vii) proof, 
        in a form specified by the commissioner, that the claimant has 
        executed and acknowledged in the manner required by law for a 
        deed, and recorded, a covenant that the land is not and shall 
        not be developed in a manner inconsistent with the requirements 
        and conditions of this chapter.  The covenant shall state in 
        writing that the covenant is binding on the claimant and the 
        claimant's successor or assignee, and that it runs with the land 
        for a period of not less than eight years.  The commissioner 
        shall specify the form of the covenant and provide copies upon 
        request.  The covenant must include a legal description that 
        encompasses all the forest land that the claimant wishes to 
        enroll under this section or the certificate of title number for 
        that land if it is registered land. 
           (b) In all cases, the commissioner shall notify the 
        claimant within 90 days after receipt of a completed application 
        that either the land has or has not been approved for enrollment.
        A claimant whose application is denied may appeal the denial as 
        provided in section 290C.11, paragraph (a). 
           (c) Within 90 days after the denial of an application, or 
        within 90 days after the final resolution of any appeal related 
        to the denial, the commissioner shall execute and acknowledge a 
        document releasing the land from the covenant required under 
        this chapter.  The document must be mailed to the claimant and 
        is entitled to be recorded. 
           (d) The social security numbers collected from individuals 
        under this section are private data as provided in section 13.49.
        The state or federal business tax registration number and date 
        of birth data collected under this section are also private data 
        but may be shared with county assessors for purposes of tax 
        administration and with county treasurers for purposes of the 
        revenue recapture under chapter 270A. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 9.  [290C.05] [ANNUAL CERTIFICATION.] 
           On or before July 1 of each year, beginning with the year 
        after the claimant has received an approved application, the 
        commissioner shall send each claimant enrolled under the 
        sustainable forest incentive program a certification form.  The 
        claimant must sign the certification, attesting that the 
        requirements and conditions for continued enrollment in the 
        program are currently being met, and must return the signed 
        certification form to the commissioner by August 15 of that same 
        year.  Failure to return an annual certification form by the due 
        date shall result in removal of the lands from the provisions of 
        the sustainable forest incentive program, and the imposition of 
        any applicable removal penalty.  The claimant may appeal the 
        removal and any associated penalty according to the procedures 
        and within the time allowed under this chapter. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 10.  [290C.06] [CALCULATION OF AVERAGE ESTIMATED 
        MARKET VALUE; TIMBERLAND.] 
           The commissioner shall annually calculate a statewide 
        average estimated market value per acre for class 2b timberland 
        under section 273.13, subdivision 23, paragraph (b). 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 11.  [290C.07] [CALCULATION OF INCENTIVE PAYMENT.] 
           An approved claimant under the sustainable forest incentive 
        program is eligible to receive an annual payment.  The payment 
        shall equal the greater of: 
           (1) the difference between the property tax that would be 
        paid on the property using the previous year's statewide average 
        total township tax rate and the class rate for class 2b 
        timberland under section 273.13, subdivision 23, paragraph (b), 
        if the property were valued at (i) the average statewide 
        timberland market value per acre calculated under section 
        290C.06, and (ii) the average statewide timberland current use 
        value per acre calculated under section 290C.02, subdivision 5; 
           (2) two-thirds of the property tax amount determined by 
        using the previous year's statewide average total township tax 
        rate, the estimated market value per acre as calculated in 
        section 290C.06, and the class rate for 2b timberland under 
        section 273.13, subdivision 23, paragraph (b); or 
           (3) $1.50 per acre for each acre enrolled in the 
        sustainable forest incentive program. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 12.  [290C.08] [ANNUAL INCENTIVE PAYMENT; 
        APPROPRIATION.] 
           Subdivision 1.  [ANNUAL PAYMENT.] An incentive payment for 
        each acre of enrolled land will be made annually to each 
        claimant in the amount determined under section 290C.07.  The 
        incentive payment shall be paid on or before October 1 each year 
        based on the certifications due August 15 of that year.  
        Interest at the annual rate determined under section 270.75 
        shall be included with any incentive payment not paid by the 
        later of October 1 of the year the certification was due, or 45 
        days after the completed certification was returned or filed if 
        the commissioner accepts a certification filed after August 15 
        of the taxes payable year as the resolution of an appeal. 
           Subd. 2.  [APPROPRIATION.] The amount necessary to make the 
        payments under this section is annually appropriated to the 
        commissioner from the general fund. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 13.  [290C.09] [REMOVAL FOR PROPERTY TAX DELINQUENCY.] 
           The commissioner shall immediately remove any property 
        enrolled in the sustainable forest incentive program for which 
        taxes are determined to be delinquent as provided in chapter 279 
        and shall notify the claimant of such action.  Lands terminated 
        from the sustainable forest incentive program under this section 
        are not entitled to any payments provided in this chapter and 
        are subject to removal penalties prescribed in section 290C.11.  
        The claimant has 60 days from the receipt of notice from the 
        commissioner under this section to pay the delinquent taxes.  If 
        the delinquent taxes are paid within this 60-day period, the 
        lands shall be reinstated in the program as if they had not been 
        withdrawn and without the payment of a penalty. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 14.  [290C.10] [WITHDRAWAL PROCEDURES.] 
           An approved claimant under the sustainable forest incentive 
        program for a minimum of four years may notify the commissioner 
        of the intent to terminate enrollment.  Within 90 days of 
        receipt of notice to terminate enrollment, the commissioner 
        shall inform the claimant in writing, acknowledging receipt of 
        this notice and indicating the effective date of termination 
        from the sustainable forest incentive program.  Termination of 
        enrollment in the sustainable forest incentive program occurs on 
        January 1 of the fifth calendar year that begins after receipt 
        by the commissioner of the termination notice.  After the 
        commissioner issues an effective date of termination, a claimant 
        wishing to continue the property's enrollment in the sustainable 
        forest incentive program beyond the termination date must apply 
        for enrollment as prescribed in section 290C.04.  A claimant who 
        withdraws a parcel of land from this program may not reenroll 
        the parcel for a period of three years.  Within 90 days after 
        the termination date, the commissioner shall execute and 
        acknowledge a document releasing the land from the covenant 
        required under this chapter.  The document must be mailed to the 
        claimant and is entitled to be recorded.  The commissioner may 
        allow early withdrawal from the Sustainable Forest Incentive Act 
        without penalty in cases of condemnation for a public purpose 
        notwithstanding the provisions of this section. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 15.  [290C.11] [PENALTIES FOR REMOVAL.] 
           (a) If the commissioner determines that property enrolled 
        in the sustainable forest incentive program is in violation of 
        the conditions for enrollment as specified in section 290C.03, 
        the commissioner shall notify the claimant of the intent to 
        remove all enrolled land from the sustainable forest incentive 
        program.  The claimant has 60 days to appeal this determination. 
        The appeal must be made in writing to the commissioner, who 
        shall, within 60 days, notify the claimant as to the outcome of 
        the appeal.  Within 60 days after the commissioner denies an 
        appeal, or within 120 days after the commissioner received a 
        written appeal if the commissioner has not made a determination 
        in that time, the owner may appeal to tax court under chapter 
        271 as if the appeal is from an order of the commissioner. 
           (b) If the commissioner determines the property is to be 
        removed from the sustainable forest incentive program, the 
        claimant is liable for payment to the commissioner in the amount 
        equal to the payments received under this chapter for the 
        previous four-year period, plus interest.  The claimant has 90 
        days to satisfy the payment for removal of land from the 
        sustainable forest incentive program under this section.  If the 
        penalty is not paid within the 90-day period under this 
        paragraph, the commissioner shall certify the amount to the 
        county auditor for collection as a part of the general ad 
        valorem real property taxes on the land in the following taxes 
        payable year.  
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 
           Sec. 16.  [APPROPRIATIONS.] 
           $194,000 is appropriated in fiscal year 2003 from the 
        general fund to the commissioner of revenue to administer this 
        article.  This is a one-time appropriation.  If the commissioner 
        determines that an appropriation is needed for this purpose in 
        fiscal year 2004 and beyond, it must be presented as a change 
        request. 
           Sec. 17.  [REPEALER.] 
           Minnesota Statutes 2000, sections 270.31; 270.32; 270.33; 
        270.34; 270.35; 270.36; 270.37; 270.38; and 270.39, are repealed.
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2002, payable in 2003, and thereafter. 

                                   ARTICLE 9 
                       INCOME AND CORPORATE FRANCHISE TAX 
           Section 1.  Minnesota Statutes 2000, section 290.01, is 
        amended by adding a subdivision to read: 
           Subd. 5b.  [INSURANCE COMPANY.] The terms "insurance 
        company," "life insurance company," and "insurance company other 
        than life," have the meanings given in the Internal Revenue Code.
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2000. 
           Sec. 2.  Minnesota Statutes 2000, section 290.01, 
        subdivision 7, is amended to read: 
           Subd. 7.  [RESIDENT.] The term "resident" means (1) any 
        individual domiciled in Minnesota, except that an individual is 
        not a "resident" for the period of time that the individual 
        is either: 
           (1) on active duty stationed outside of Minnesota while in 
        the armed forces of the United States or the United Nations; or 
           (2) a "qualified individual" as defined in section 
        911(d)(1) of the Internal Revenue Code, if the qualified 
        individual notifies the county within three months of moving out 
        of the country that homestead status be revoked for the 
        Minnesota residence of the qualified individual, and the 
        property is not classified as a homestead while the individual 
        remains a qualified individual; and (2). 
           "Resident" also means any individual domiciled outside the 
        state who maintains a place of abode in the state and spends in 
        the aggregate more than one-half of the tax year in Minnesota, 
        unless: 
           (1) the individual or the spouse of the individual is in 
        the armed forces of the United States,; or 
           (2) the individual is covered under the reciprocity 
        provisions in section 290.081. 
           For purposes of this subdivision, presence within the state 
        for any part of a calendar day constitutes a day spent in the 
        state.  Individuals shall keep adequate records to substantiate 
        the days spent outside the state. 
           The term "abode" means a dwelling maintained by an 
        individual, whether or not owned by the individual and whether 
        or not occupied by the individual, and includes a dwelling place 
        owned or leased by the individual's spouse. 
           Neither the commissioner nor any court shall consider 
        charitable contributions made by an individual within or without 
        the state in determining if the individual is domiciled in 
        Minnesota. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2000. 
           Sec. 3.  Minnesota Statutes 2000, 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 amount used to 
        claim 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 purchased or leased for use 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) (7) 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 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) (8) the exemption amount allowed under Laws 1995, 
        chapter 255, article 3, section 2, subdivision 3; 
           (10) (9) 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, sections 12601 to 12604; 
           (11) (10) 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; 
           (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) (11) 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; and 
           (12) for individuals who are allowed a federal foreign tax 
        credit for taxes that do not qualify for a credit under section 
        290.06, subdivision 22, an amount equal to the carryover of 
        subnational foreign taxes for the taxable year, but not to 
        exceed the total subnational foreign taxes reported in claiming 
        the foreign tax credit.  For purposes of this clause, "federal 
        foreign tax credit" means the credit allowed under section 27 of 
        the Internal Revenue Code, and "carryover of subnational foreign 
        taxes" equals the carryover allowed under section 904(c) of the 
        Internal Revenue Code minus national level foreign taxes to the 
        extent they exceed the federal foreign tax credit. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2001, except that the amendment to 
        clause (3) is effective for tax years beginning after December 
        31, 2000. 
           Sec. 4.  Minnesota Statutes 2000, 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) (8) the exempt foreign trade income of a foreign sales 
        corporation under sections 921(a) and 291 of the Internal 
        Revenue Code; 
           (10) (9) the amount of percentage depletion deducted under 
        sections 611 through 614 and 291 of the Internal Revenue Code; 
           (11) (10) 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) (11) the amount of any deemed dividend from a foreign 
        operating corporation determined pursuant to section 290.17, 
        subdivision 4, paragraph (g); 
           (13) (12) the amount of any environmental tax paid under 
        section 59(a) of the Internal Revenue Code; and 
           (14) (13) 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, 2000. 
           Sec. 5.  Minnesota Statutes 2000, 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) (9) 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) (10) 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) (11) 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) (12) 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) (13) 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) (14) 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; 
           (16) (15) the amount of any refund of environmental taxes 
        paid under section 59A of the Internal Revenue Code; and 
           (17) (16) 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, 2000. 
           Sec. 6.  Minnesota Statutes 2000, section 290.01, 
        subdivision 22, is amended to read: 
           Subd. 22.  [TAXABLE NET INCOME.] For tax years beginning 
        after December 31, 1986, the term "taxable net income" means:  
           (1) for resident individuals the same as net income; 
           (2) for individuals who were not residents of Minnesota for 
        the entire year, the same as net income except that the tax is 
        imposed only on the Minnesota apportioned share of that income 
        as determined pursuant to section 290.06, subdivision 2c, 
        paragraph (e); 
           (3) for all other taxpayers, the part of net income that is 
        allocable to Minnesota by assignment or apportionment under one 
        or more of sections 290.17, 290.191, 290.20, 290.35, and 290.36. 
           For tax years beginning before January 1, 1987, the term 
        "taxable net income"  means the net income assignable to this 
        state pursuant to sections 290.17 to 290.20.  For corporations, 
        taxable net income is then reduced by the deductions contained 
        in section 290.21.  
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 7.  Minnesota Statutes 2000, section 290.01, 
        subdivision 29, is amended to read: 
           Subd. 29.  [TAXABLE INCOME.] For tax years beginning after 
        December 31, 1986, The term "taxable income" means:  
           (1) for individuals, estates, and trusts, the same as 
        taxable net income; 
           (2) for corporations, including insurance companies, the 
        taxable net income less 
           (i) the net operating loss deduction under section 290.095; 
        and 
           (ii) the dividends received deduction under section 290.21, 
        subdivision 4; and 
           (iii) the charitable contribution deduction under section 
        290.21, subdivision 3. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 8.  Minnesota Statutes 2000, section 290.014, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CORPORATIONS.] Except as provided in section 
        290.015, corporations are subject to the return filing 
        requirements and to tax as provided in this chapter if the 
        corporation so exercises its franchise as to engage in such 
        contacts with this state as to cause part of the income of the 
        corporation to be:  
           (1) allocable to this state under section 290.17, 290.191, 
        290.20, 290.35, or 290.36; 
           (2) taxed to the corporation under the Internal Revenue 
        Code (or not taxed under the Internal Revenue Code by reason of 
        its character but of a character which is taxable under this 
        chapter) in its capacity as a beneficiary of an estate with 
        income allocable to this state under section 290.17, 290.191, or 
        290.20 and the income, taking into account the income character 
        provisions of section 662(b) of the Internal Revenue Code, would 
        be allocable to this state under section 290.17, 290.191, or 
        290.20 if realized by the corporation directly from the source 
        from which realized by the estate; 
           (3) taxed to the corporation under the Internal Revenue 
        Code (or not taxed under the Internal Revenue Code by reason of 
        its character but of a character which is taxable under this 
        chapter) in its capacity as a beneficiary or grantor or other 
        person treated as a substantial owner of a trust with income 
        allocable to this state under section 290.17, 290.191, or 290.20 
        and the income, taking into account the income character 
        provisions of section 652(b), 662(b), or 664(b) of the Internal 
        Revenue Code, would be allocable to this state under section 
        290.17, 290.191, or 290.20 if realized by the corporation 
        directly from the source from which realized by the trust; or 
           (4) taxed to the corporation under the Internal Revenue 
        Code (or not taxed under the Internal Revenue Code by reason of 
        its character but of a character which is taxable under this 
        chapter) in its capacity as a limited or general partner in a 
        partnership with income allocable to this state under section 
        290.17, 290.191, or 290.20 and the income, taking into account 
        the income character provisions of section 702(b) of the 
        Internal Revenue Code, would be allocable to this state under 
        section 290.17, 290.191, or 290.20 if realized by the 
        corporation directly from the source from which realized by the 
        partnership. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 9.  Minnesota Statutes 2000, section 290.05, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXEMPT ENTITIES.] The following 
        corporations, individuals, estates, trusts, and organizations 
        shall be exempted from taxation under this chapter, provided 
        that every such person or corporation claiming exemption under 
        this chapter, in whole or in part, must establish to the 
        satisfaction of the commissioner the taxable status of any 
        income or activity: 
           (a) corporations, individuals, estates, and trusts engaged 
        in the business of mining or producing iron ore and other ores 
        the mining or production of which is subject to the occupation 
        tax imposed by section 298.01; but if any such corporation, 
        individual, estate, or trust engages in any other business or 
        activity or has income from any property not used in such 
        business it shall be subject to this tax computed on the net 
        income from such property or such other business or activity.  
        Royalty shall not be considered as income from the business of 
        mining or producing iron ore within the meaning of this section; 
           (b) the United States of America, the state of Minnesota or 
        any political subdivision of either agencies or 
        instrumentalities, whether engaged in the discharge of 
        governmental or proprietary functions; and 
           (c) any insurance company that is domiciled in a state or 
        country other than Minnesota that imposes retaliatory taxes, 
        fines, deposits, penalties, licenses, or fees and that does not 
        grant, on a reciprocal basis, exemption from such retaliatory 
        taxes to insurance companies or their agents domiciled in 
        Minnesota.  "Retaliatory taxes" means taxes imposed on insurance 
        companies organized in another state or country that result from 
        the fact that an insurance company organized in the taxing 
        jurisdiction and doing business in the other jurisdiction is 
        subject to taxes, fines, deposits, penalties, licenses, or fees 
        in an amount exceeding that imposed by the taxing jurisdiction 
        upon an insurance company organized in the other state or 
        country and doing business to the same extent in the taxing 
        jurisdiction; and 
           (d) town and farmers' mutual insurance companies and mutual 
        property and casualty insurance companies, other than those (1) 
        writing life insurance or (2) whose total assets on December 31, 
        1989, exceeded $1,600,000,000. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 10.  Minnesota Statutes 2000, 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, 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": 
           (1) includes: 
           (i) the District of Columbia, but does not include; and 
           (ii) a province or territory of Canada; but 
           (2) excludes Puerto Rico or and 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. 
           (k) For a tax imposed by a province or territory of Canada, 
        the tax for purposes of this subdivision is the excess of the 
        tax over the amount of the foreign tax credit allowed under 
        section 27 of the Internal Revenue Code.  In determining the 
        amount of the foreign tax credit allowed, the net income taxes 
        imposed by Canada on the income are deducted first.  Any 
        remaining amount of the allowable foreign tax credit reduces the 
        provincial or territorial tax that qualifies for the credit 
        under this subdivision. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 11.  Minnesota Statutes 2000, section 290.0674, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
        a credit against the tax imposed by this chapter in an amount 
        equal to 75 percent of the amount paid for education-related 
        expenses for a qualifying child in kindergarten through grade 
        12.  For purposes of this section, "education-related expenses" 
        means: 
           (1) fees or tuition for instruction by an instructor under 
        section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 
        (5), or by a member of the Minnesota music teachers association, 
        and who is not a lineal ancestor or sibling of the dependent for 
        instruction outside the regular school day or school year, 
        including tutoring, driver's education offered as part of school 
        curriculum, regardless of whether it is taken from a public or 
        private entity or summer camps, in grade or age appropriate 
        curricula that supplement curricula and instruction available 
        during the regular school year, that assists a dependent to 
        improve knowledge of core curriculum areas or to expand 
        knowledge and skills under the graduation rule under section 
        120B.02, paragraph (e), clauses (1) to (7), (9), and (10), and 
        that do not include the teaching of religious tenets, doctrines, 
        or worship, the purpose of which is to instill such tenets, 
        doctrines, or worship; 
           (2) expenses for textbooks, including books and other 
        instructional materials and equipment used purchased or leased 
        for use in elementary and secondary schools in teaching only 
        those subjects legally and commonly taught in public elementary 
        and secondary schools in this state.  "Textbooks" does not 
        include instructional books and materials used in the teaching 
        of religious tenets, doctrines, or worship, the purpose of which 
        is to instill such tenets, doctrines, or worship, nor does it 
        include books or materials for extracurricular activities 
        including sporting events, musical or dramatic events, speech 
        activities, driver's education, or similar programs; 
           (3) a maximum expense of $200 per family for personal 
        computer hardware, excluding single purpose processors, and 
        educational software that assists a dependent to improve 
        knowledge of core curriculum areas or to expand knowledge and 
        skills under the graduation rule under section 120B.02 purchased 
        for use in the taxpayer's home and not used in a trade or 
        business regardless of whether the computer is required by the 
        dependent's school; and 
           (4) the amount paid to others for transportation of a 
        qualifying child 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 purposes of this section, "qualifying child" has the 
        meaning given in section 32(c)(3) of the Internal Revenue Code. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2001, except that the amendment to 
        clause (2) is effective for tax years beginning after December 
        31, 2000. 
           Sec. 12.  [290.0679] [ASSIGNMENT OF REFUND.] 
           Subdivision 1.  [DEFINITIONS.] (a) "Qualifying taxpayer" 
        means a resident who has a child in kindergarten through grade 
        12 in the current tax year and who met the income requirements 
        under section 290.0674, subdivision 2, for receiving the 
        education credit in the tax year preceding the assignment of the 
        taxpayer's refund. 
           (b) "Education credit" means the credit allowed under 
        section 290.0674. 
           (c) "Refund" means an individual income tax refund. 
           (d) "Financial institution" means a state or federally 
        chartered bank, savings bank, savings association, or credit 
        union. 
           (e) "Qualifying organization" means a tax-exempt 
        organization under section 501(c)(3) of the Internal Revenue 
        Code. 
           (f) "Assignee" means a financial institution or qualifying 
        organization that is entitled to receive payment of a refund 
        assigned under this section. 
           Subd. 2.  [CONDITIONS FOR ASSIGNMENT.] A qualifying 
        taxpayer may assign all or part of an anticipated refund for the 
        current and future taxable years to a financial institution or a 
        qualifying organization.  A financial institution or qualifying 
        organization accepting assignment must pay the amount secured by 
        the assignment to a third-party vendor.  The commissioner of 
        children, families, and learning shall provide a list of 
        categories of products and services that qualify for the 
        education credit to financial institutions and qualifying 
        organizations.  A financial institution or qualifying 
        organization that accepts assignments under this section must 
        verify as part of the assignment documentation that the product 
        or service to be provided by the third-party vendor qualifies 
        for the education credit.  The amount assigned for the current 
        and future taxable years may not exceed the maximum allowable 
        education credit for the current taxable year.  Both the 
        taxpayer and spouse must consent to the assignment of a refund 
        from a joint return. 
           Subd. 3.  [CONSENT FOR DISCLOSURE.] When the taxpayer 
        applies to the financial institution or the qualifying 
        organization for a loan to be secured by the assignment under 
        subdivision 2, the taxpayer must sign a written consent on a 
        form prescribed by the commissioner.  The consent must authorize 
        the commissioner to disclose to the financial institution or 
        qualifying organization the total amount of state taxes owed or 
        revenue recapture claims filed under chapter 270A against the 
        taxpayer, and the total amount of outstanding assignments made 
        by the taxpayer under this section.  For a refund from a joint 
        return, the consent must also authorize the disclosure of taxes, 
        revenue recapture claims, and assignments relating to the 
        taxpayer's spouse, and must be signed by the spouse.  The 
        financial institution or qualifying organization may request 
        that the taxpayer provide a copy of the taxpayer's previous 
        year's income tax return, if any, and may assist the taxpayer in 
        requesting a copy of the previous year's return from the 
        commissioner. 
           Subd. 4.  [CONSUMER DISCLOSURE.] (a) A third-party vendor 
        that receives payment of the amount secured by an assignment 
        must comply with the requirements of this subdivision. 
           (b) The third-party vendor must disclose to the taxpayer, 
        in plain language: 
           (1) the cost of each product or service for which the 
        third-party vendor separately charges the taxpayer; 
           (2) any fees charged to the taxpayer for tax preparation 
        services; and 
           (3) for qualifying low-income taxpayers, information on the 
        availability of free tax preparation services. 
           (c) The third-party vendor must provide to the taxpayer 
        executed copies of any documents signed by the taxpayer. 
           Subd. 5.  [FILING OF ASSIGNMENT.] The commissioner shall 
        prescribe the form of and manner for filing an assignment of a 
        refund under this section. 
           Subd. 6.  [EFFECT OF ASSIGNMENT.] The taxpayer may not 
        revoke an assignment after it has been filed.  The assignee must 
        notify the commissioner if the loan secured by the assignment 
        has been paid in full, in which case the assignment is 
        canceled.  An assignment is in effect until the amount assigned 
        is refunded in full to the assignee, or until the assignee 
        cancels the assignment. 
           Subd. 7.  [PAYMENT OF REFUND.] When a refund assigned under 
        this section is issued by the commissioner, the proceeds of the 
        refund, as defined in subdivision 1, paragraph (c), must be 
        distributed in the following order: 
           (1) to satisfy any delinquent tax obligations of the 
        taxpayer which are owed to the commissioner; 
           (2) to claimant agencies to satisfy any revenue recapture 
        claims filed against the taxpayer, in the order of priority of 
        the claims set forth in section 270A.10; 
           (3) to assignees to satisfy assignments under this section, 
        based on the order in time in which the commissioner received 
        the assignments; and 
           (4) to the taxpayer. 
           Subd. 8.  [LEGAL ACTION.] If there is a dispute between the 
        taxpayer and the assignee after the commissioner has remitted 
        the taxpayer's refund to the assignee, the taxpayer's only 
        remedy is to bring an action against the assignee in court to 
        recover the refund.  The action must be brought within two years 
        after the commissioner remits the refund to the assignee.  The 
        commissioner may not be a party to the proceeding. 
           Subd. 9.  [ASSIGNMENTS PRIVATE DATA.] Information regarding 
        assignments under this section is classified as private data on 
        individuals. 
           [EFFECTIVE DATE.] This section is effective for assignment 
        of refunds filed with the commissioner after December 31, 2001.  
        The time period for filing assignments expires December 31, 
        2003, but assignments filed on or before that date remain in 
        effect until satisfied or canceled. 
           Sec. 13.  Minnesota Statutes 2000, 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; 
           (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 clause (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 6.4 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 Minnesota Statutes 2000, 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 Minnesota Statutes 2000, section 290.21, 
        subdivision 3, clauses (a) to (e). 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 14.  Minnesota Statutes 2000, section 290.0921, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAX IMPOSED.] In addition to the taxes 
        computed under this chapter without regard to this section, the 
        franchise tax imposed on corporations includes a tax equal to 
        the excess, if any, for the taxable year of:  
           (1) 5.8 percent of Minnesota alternative minimum taxable 
        income less the credit allowed under section 290.35, subdivision 
        3; over 
           (2) the tax imposed under section 290.06, subdivision 1, 
        without regard to this section.  
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 15.  Minnesota Statutes 2000, section 290.0921, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given them. 
           (b) "Alternative minimum taxable net income" is alternative 
        minimum taxable income, 
           (1) less the exemption amount, and 
           (2) apportioned or allocated to Minnesota under section 
        290.17, 290.191, or 290.20. 
           (c) The "exemption amount" is $40,000, reduced, but not 
        below zero, by 25 percent of the excess of alternative minimum 
        taxable income over $150,000. 
           (d) "Minnesota alternative minimum taxable income" is 
        alternative minimum taxable net income, less the deductions for 
        alternative tax net operating loss under subdivision 4; 
        charitable contributions under subdivision 5; and dividends 
        received under subdivision 6.  The sum of the deductions under 
        this paragraph may not exceed 90 percent of alternative minimum 
        taxable net income.  This limitation does not apply to a 
        deduction for dividends paid to or received from a corporation 
        which is subject to tax under section 290.35 or 290.36 and which 
        is a member of an affiliated group of corporations as defined by 
        the Internal Revenue Code. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 16.  Minnesota Statutes 2000, section 290.0921, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DIVIDENDS RECEIVED.] (a) A deduction is allowed 
        from alternative minimum taxable net income equal to the 
        deduction for dividends received under section 290.21, 
        subdivision 4, for purposes of calculating taxable income under 
        section 290.01, subdivision 29. 
           (b) The amount of the deduction must not exceed 90 percent 
        of alternative minimum taxable net income.  This limitation does 
        not apply to dividends paid to or received from a corporation 
        which is subject to tax under section 290.35 or 290.36 and which 
        is a member of an affiliated group of corporations as defined by 
        the Internal Revenue Code. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 17.  Minnesota Statutes 2000, section 290.0922, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXEMPTIONS.] The following entities are exempt 
        from the tax imposed by this section: 
           (1) corporations exempt from tax under section 290.05 other 
        than insurance companies exempt under subdivision 1, paragraph 
        (d); 
           (2) real estate investment trusts; 
           (3) regulated investment companies or a fund thereof; and 
           (4) entities having a valid election in effect under 
        section 860D(b) of the Internal Revenue Code; 
           (5) town and farmers' mutual insurance companies; and 
           (6) cooperatives organized under chapter 308A that provide 
        housing exclusively to persons age 55 and over and are 
        classified as homesteads under section 273.124, subdivision 3. 
           Entities not specifically exempted by this subdivision are 
        subject to tax under this section, notwithstanding section 
        290.05.  
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 18.  Minnesota Statutes 2000, section 290.093, is 
        amended to read: 
           290.093 [TAX COMPUTATION FOR MUTUAL SAVINGS BANKS 
        CONDUCTING LIFE INSURANCE BUSINESS.] 
           Mutual savings banks as defined in section 594 of the 
        Internal Revenue Code are subject to a tax consisting of the sum 
        of the taxes determined under clauses (1) and (2):  
           (1) a tax computed on the taxable income determined without 
        regard to any items of gross income or deductions properly 
        allocable to the business of the life insurance department, at 
        the rates and in the manner as if this section did not apply; 
        and 
           (2) a tax computed on the income of the life insurance 
        department determined without regard to any items of gross 
        income or deductions not properly allocable to the department 
        computed in the manner provided in section 290.35 and at the 
        rate provided in section 290.06 for a corporation not engaged in 
        the business of issuing life insurance contracts.  
           This section applies only if the life insurance department 
        would, if it were treated as a separate corporation, qualify as 
        a life insurance company under section 816 of the Internal 
        Revenue Code. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 19.  Minnesota Statutes 2000, section 290.095, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DEFINED AND LIMITED.] (a) The term "net 
        operating loss" as used in this section shall mean a net 
        operating loss as defined in section 172(c) or 810(a), in the 
        case of life insurance companies, of the Internal Revenue Code, 
        with the modifications specified in subdivision 4.  The 
        deductions provided in section 290.21 and the modification 
        provided in section 290.01, subdivision 19d, clause (11) (10), 
        cannot be used in the determination of a net operating loss.  
           (b) The term "net operating loss deduction" as used in this 
        section means the aggregate of the net operating loss carryovers 
        to the taxable year, computed in accordance with subdivision 3.  
        The provisions of section 172(b) or 810(b), in the case of life 
        insurance companies, of the Internal Revenue Code relating to 
        the carryback of net operating losses, do not apply. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 20.  Minnesota Statutes 2000, section 290.17, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SCOPE OF ALLOCATION RULES.] (a) The income 
        of resident individuals is not subject to allocation outside 
        this state.  The allocation rules apply to nonresident 
        individuals, estates, trusts, nonresident partners of 
        partnerships, nonresident shareholders of corporations treated 
        as "S" corporations under section 290.9725, and all corporations 
        not having such an election in effect.  If a partnership or 
        corporation would not otherwise be subject to the allocation 
        rules, but conducts a trade or business that is part of a 
        unitary business involving another legal entity that is subject 
        to the allocation rules, the partnership or corporation is 
        subject to the allocation rules. 
           (b) Expenses, losses, and other deductions (referred to 
        collectively in this paragraph as "deductions") must be 
        allocated along with the item or class of gross income to which 
        they are definitely related for purposes of assignment under 
        this section or apportionment under section 290.191, 290.20, 
        290.35, or 290.36.  Deductions not definitely related to any 
        item or class of gross income are assigned to the taxpayer's 
        domicile. 
           (c) In the case of an individual who is a resident for only 
        part of a taxable year, the individual's income, gains, losses, 
        and deductions from the distributive share of a partnership, S 
        corporation, trust, or estate are not subject to allocation 
        outside this state to the extent of the distributive share 
        multiplied by a ratio, the numerator of which is the number of 
        days the individual was a resident of this state during the tax 
        year of the partnership, S corporation, trust, or estate, and 
        the denominator of which is the number of days in the taxable 
        year of the partnership, S corporation, trust, or estate. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 21.  Minnesota Statutes 2000, section 290.17, 
        subdivision 4, is amended to read: 
           Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
        business conducted wholly within this state or partly within and 
        partly without this state is part of a unitary business, the 
        entire income of the unitary business is subject to 
        apportionment pursuant to section 290.191.  Notwithstanding 
        subdivision 2, paragraph (c), none of the income of a unitary 
        business is considered to be derived from any particular source 
        and none may be allocated to a particular place except as 
        provided by the applicable apportionment formula.  The 
        provisions of this subdivision do not apply to business income 
        subject to subdivision 5, income of an insurance company 
        determined under section 290.35, or income of an investment 
        company determined under section 290.36. 
           (b) The term "unitary business" means business activities 
        or operations which result in a flow of value between them.  The 
        term may be applied within a single legal entity or between 
        multiple entities and without regard to whether each entity is a 
        sole proprietorship, a corporation, a partnership or a trust.  
           (c) Unity is presumed whenever there is unity of ownership, 
        operation, and use, evidenced by centralized management or 
        executive force, centralized purchasing, advertising, 
        accounting, or other controlled interaction, but the absence of 
        these centralized activities will not necessarily evidence a 
        nonunitary business.  Unity is also presumed when business 
        activities or operations are of mutual benefit, dependent upon 
        or contributory to one another, either individually or as a 
        group. 
           (d) Where a business operation conducted in Minnesota is 
        owned by a business entity that carries on business activity 
        outside the state different in kind from that conducted within 
        this state, and the other business is conducted entirely outside 
        the state, it is presumed that the two business operations are 
        unitary in nature, interrelated, connected, and interdependent 
        unless it can be shown to the contrary.  
           (e) Unity of ownership is not deemed to exist when a 
        corporation is involved unless that corporation is a member of a 
        group of two or more business entities and more than 50 percent 
        of the voting stock of each member of the group is directly or 
        indirectly owned by a common owner or by common owners, either 
        corporate or noncorporate, or by one or more of the member 
        corporations of the group.  For this purpose, the term "voting 
        stock" shall include membership interests of mutual insurance 
        holding companies formed under section 60A.077.  
           (f) The net income and apportionment factors under section 
        290.191 or 290.20 of foreign corporations and other foreign 
        entities which are part of a unitary business shall not be 
        included in the net income or the apportionment factors of the 
        unitary business.  A foreign corporation or other foreign entity 
        which is required to file a return under this chapter shall file 
        on a separate return basis.  The net income and apportionment 
        factors under section 290.191 or 290.20 of foreign operating 
        corporations shall not be included in the net income or the 
        apportionment factors of the unitary business except as provided 
        in paragraph (g). 
           (g) The adjusted net income of a foreign operating 
        corporation shall be deemed to be paid as a dividend on the last 
        day of its taxable year to each shareholder thereof, in 
        proportion to each shareholder's ownership, with which such 
        corporation is engaged in a unitary business.  Such deemed 
        dividend shall be treated as a dividend under section 290.21, 
        subdivision 4. 
           Dividends actually paid by a foreign operating corporation 
        to a corporate shareholder which is a member of the same unitary 
        business as the foreign operating corporation shall be 
        eliminated from the net income of the unitary business in 
        preparing a combined report for the unitary business.  The 
        adjusted net income of a foreign operating corporation shall be 
        its net income adjusted as follows: 
           (1) any taxes paid or accrued to a foreign country, the 
        commonwealth of Puerto Rico, or a United States possession or 
        political subdivision of any of the foregoing shall be a 
        deduction; and 
           (2) the subtraction from federal taxable income for 
        payments received from foreign corporations or foreign operating 
        corporations under section 290.01, subdivision 19d, clause 
        (11) (10), shall not be allowed. 
           If a foreign operating corporation incurs a net loss, 
        neither income nor deduction from that corporation shall be 
        included in determining the net income of the unitary business. 
           (h) For purposes of determining the net income of a unitary 
        business and the factors to be used in the apportionment of net 
        income pursuant to section 290.191 or 290.20, there must be 
        included only the income and apportionment factors of domestic 
        corporations or other domestic entities other than foreign 
        operating corporations that are determined to be part of the 
        unitary business pursuant to this subdivision, notwithstanding 
        that foreign corporations or other foreign entities might be 
        included in the unitary business.  
           (i) Deductions for expenses, interest, or taxes otherwise 
        allowable under this chapter that are connected with or 
        allocable against dividends, deemed dividends described in 
        paragraph (g), or royalties, fees, or other like income 
        described in section 290.01, subdivision 19d, clause (11) (10), 
        shall not be disallowed. 
           (j) Each corporation or other entity, except a sole 
        proprietorship, that is part of a unitary business must file 
        combined reports as the commissioner determines.  On the 
        reports, all intercompany transactions between entities included 
        pursuant to paragraph (h) must be eliminated and the entire net 
        income of the unitary business determined in accordance with 
        this subdivision is apportioned among the entities by using each 
        entity's Minnesota factors for apportionment purposes in the 
        numerators of the apportionment formula and the total factors 
        for apportionment purposes of all entities included pursuant to 
        paragraph (h) in the denominators of the apportionment formula. 
           (k) If a corporation has been divested from a unitary 
        business and is included in a combined report for a fractional 
        part of the common accounting period of the combined report:  
           (1) its income includable in the combined report is its 
        income incurred for that part of the year determined by 
        proration or separate accounting; and 
           (2) its sales, property, and payroll included in the 
        apportionment formula must be prorated or accounted for 
        separately. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 22.  Minnesota Statutes 2000, section 290.191, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
        Except for those trades or businesses required to use a 
        different formula under subdivision 3 or section 290.35 or 
        290.36, and for those trades or businesses that receive 
        permission to use some other method under section 290.20 or 
        under subdivision 4, a trade or business required to apportion 
        its net income must apportion its income to this state on the 
        basis of the percentage obtained by taking the sum of:  
           (1) 75 percent of the percentage which the sales made 
        within this state in connection with the trade or business 
        during the tax period are of the total sales wherever made in 
        connection with the trade or business during the tax period; 
           (2) 12.5 percent of the percentage which the total tangible 
        property used by the taxpayer in this state in connection with 
        the trade or business during the tax period is of the total 
        tangible property, wherever located, used by the taxpayer in 
        connection with the trade or business during the tax period; and 
           (3) 12.5 percent of the percentage which the taxpayer's 
        total payrolls paid or incurred in this state or paid in respect 
        to labor performed in this state in connection with the trade or 
        business during the tax period are of the taxpayer's total 
        payrolls paid or incurred in connection with the trade or 
        business during the tax period.  
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 23.  Minnesota Statutes 2000, section 290.21, 
        subdivision 4, is amended to read: 
           Subd. 4.  (a)(1) Eighty percent of dividends received by a 
        corporation during the taxable year from another corporation, in 
        which the recipient owns 20 percent or more of the stock, by 
        vote and value, not including stock described in section 
        1504(a)(4) of the Internal Revenue Code when the corporate stock 
        with respect to which dividends are paid does not constitute the 
        stock in trade of the taxpayer or would not be included in the 
        inventory of the taxpayer, or does not constitute property held 
        by the taxpayer primarily for sale to customers in the ordinary 
        course of the taxpayer's trade or business, or when the trade or 
        business of the taxpayer does not consist principally of the 
        holding of the stocks and the collection of the income and gains 
        therefrom; and 
           (2)(i) The remaining 20 percent of dividends if the 
        dividends received are the stock in an affiliated company 
        transferred in an overall plan of reorganization and the 
        dividend is eliminated in consolidation under Treasury 
        Department Regulation 1.1502-14(a), as amended through December 
        31, 1989; or 
           (ii) The remaining 20 percent of dividends if the dividends 
        are received from a corporation which is subject to tax under 
        section 290.35 or 290.36 and which is a member of an affiliated 
        group of corporations as defined by the Internal Revenue Code 
        and the dividend is eliminated in consolidation under Treasury 
        Department Regulation 1.1502-14(a), as amended through December 
        31, 1989, or is deducted under an election under section 243(b) 
        of the Internal Revenue Code. 
           (b) Seventy percent of dividends received by a corporation 
        during the taxable year from another corporation in which the 
        recipient owns less than 20 percent of the stock, by vote or 
        value, not including stock described in section 1504(a)(4) of 
        the Internal Revenue Code when the corporate stock with respect 
        to which dividends are paid does not constitute the stock in 
        trade of the taxpayer, or does not constitute property held by 
        the taxpayer primarily for sale to customers in the ordinary 
        course of the taxpayer's trade or business, or when the trade or 
        business of the taxpayer does not consist principally of the 
        holding of the stocks and the collection of income and gain 
        therefrom.  
           (c) The dividend deduction provided in this subdivision 
        shall be allowed only with respect to dividends that are 
        included in a corporation's Minnesota taxable net income for the 
        taxable year. 
           The dividend deduction provided in this subdivision does 
        not apply to a dividend from a corporation which, for the 
        taxable year of the corporation in which the distribution is 
        made or for the next preceding taxable year of the corporation, 
        is a corporation exempt from tax under section 501 of the 
        Internal Revenue Code. 
           The dividend deduction provided in this subdivision applies 
        to the amount of regulated investment company dividends only to 
        the extent determined under section 854(b) of the Internal 
        Revenue Code. 
           The dividend deduction provided in this subdivision shall 
        not be allowed with respect to any dividend for which a 
        deduction is not allowed under the provisions of section 246(c) 
        of the Internal Revenue Code. 
           (d) If dividends received by a corporation that does not 
        have nexus with Minnesota under the provisions of Public Law 
        Number 86-272 are included as income on the return of an 
        affiliated corporation permitted or required to file a combined 
        report under section 290.34, subdivision 2, then for purposes of 
        this subdivision the determination as to whether the trade or 
        business of the corporation consists principally of the holding 
        of stocks and the collection of income and gains therefrom shall 
        be made with reference to the trade or business of the 
        affiliated corporation having a nexus with Minnesota. 
           (e) The deduction provided by this subdivision does not 
        apply if the dividends are paid by a FSC as defined in section 
        922 of the Internal Revenue Code. 
           (f) If one or more of the members of the unitary group 
        whose income is included on the combined report received a 
        dividend, the deduction under this subdivision for each member 
        of the unitary business required to file a return under this 
        chapter is the product of:  (1) 100 percent of the dividends 
        received by members of the group; (2) the percentage allowed 
        pursuant to paragraph (a) or (b); and (3) the percentage of the 
        taxpayer's business income apportionable to this state for the 
        taxable year under section 290.191 or 290.20. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 24.  Minnesota Statutes 2000, section 290.9725, is 
        amended to read: 
           290.9725 [S CORPORATION.] 
           For purposes of this chapter, the term "S corporation" 
        means any corporation having a valid election in effect for the 
        taxable year under section 1362 of the Internal Revenue Code.  
        An S corporation shall not be subject to the taxes imposed by 
        this chapter, except:  
           (1) the taxes imposed under sections 290.0922, 290.92, 
        290.9727, 290.9728, and 290.9729; and 
           (2) the tax under sections 290.06, subdivision 1, and 
        290.0921 apply to a financial institution to which either 
        section 585 or 593 of the Internal Revenue Code applies or that 
        has a wholly owned subsidiary as described in section 
        1361(b)(3)(B) of the Internal Revenue Code which is a financial 
        institution under section 585 or 593 of the Internal Revenue 
        Code. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 25.  Minnesota Statutes 2000, section 297I.20, is 
        amended to read: 
           297I.20 [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] 
           (a) An insurance company may offset against its premium tax 
        liability to this state any amount paid for assessments made for 
        insolvencies which occur after July 31, 1994, under sections 
        60C.01 to 60C.22; and any amount paid for assessments made after 
        July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 
        61B.16, or under sections 61B.18 to 61B.32 as follows: 
           (1) Each such assessment shall give rise to an amount of 
        offset equal to 20 percent of the amount of the assessment for 
        each of the five calendar years following the year in which the 
        assessment was paid. 
           (2) The amount of offset initially determined for each 
        taxable year is the sum of the amounts determined under clause 
        (1) for that taxable year. 
           (b)(1) Each year the commissioner shall compare total 
        guaranty association assessments levied over the preceding five 
        calendar years to the sum of all premium tax and corporate 
        franchise tax revenues collected from insurance companies, 
        without reduction for any guaranty association assessment offset 
        in the preceding calendar year, referred to in this subdivision 
        as "preceding year insurance tax revenues." 
           (2) If total guaranty association assessments levied over 
        the preceding five years exceed the preceding year insurance tax 
        revenues, insurance companies must be allowed only a 
        proportionate part of the premium tax offset calculated under 
        paragraph (a) for the current calendar year. 
           (3) The proportionate part of the premium tax offset 
        allowed in the current calendar year is determined by 
        multiplying the amount calculated under paragraph (a) by a 
        fraction.  The numerator of the fraction equals the preceding 
        year insurance tax revenues, and its denominator equals total 
        guaranty association assessments levied over the preceding 
        five-year period. 
           (4) The proportionate part of the premium tax offset that 
        is not allowed must be carried forward to subsequent tax years 
        and added to the amount of premium tax offset calculated under 
        paragraph (a) prior to application of the limitation imposed by 
        this paragraph. 
           (5) Any amount carried forward from prior years must be 
        allowed before allowance of the offset for the current year 
        calculated under paragraph (a). 
           (6) The premium tax offset limitation must be calculated 
        separately for (i) insurance companies subject to assessment 
        under sections 60C.01 to 60C.22, and (ii) insurance companies 
        subject to assessment under Minnesota Statutes 1992, sections 
        61B.01 to 61B.16, or 61B.18 to 61B.32. 
           (7) When the premium tax offset is limited by this 
        provision, the commissioner shall notify affected insurance 
        companies on a timely basis for purposes of completing premium 
        and corporate franchise tax returns.  
           (8) The guaranty associations created under sections 60C.01 
        to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 
        and 61B.18 to 61B.32, shall provide the commissioner with the 
        necessary information on guaranty association assessments. 
           (c)(1) If the offset determined by the application of 
        paragraphs (a) and (b) exceeds the greater of the insurance 
        company's premium tax liability under this section or its 
        corporate franchise tax liability under chapter 290 prior to 
        allowance of the credit for premium taxes, then the insurance 
        company may carry forward the excess, referred to in this 
        subdivision as the "carryforward credit" to subsequent taxable 
        years. 
           (2) The carryforward credit is allowed as an offset against 
        premium tax liability for the first succeeding year to the 
        extent that the premium tax liability for that year exceeds the 
        amount of the allowable offset for the year determined under 
        paragraphs (a) and (b). 
           (3) The carryforward credit must be reduced, but not below 
        zero, by the greater of the amount of the carryforward credit 
        allowed as an offset against the premium tax under this 
        paragraph or the amount of the carryforward credit allowed as an 
        offset against the insurance company's corporate franchise tax 
        liability under section 290.35, subdivision 6, paragraph (d).  
        The remainder, if any, of the carryforward credit must be 
        carried forward to succeeding taxable years until the entire 
        carryforward credit has been credited against the insurance 
        company's liability for premium tax under this chapter and 
        corporate franchise tax under chapter 290 if applicable for that 
        taxable year. 
           (d) When an insurer has offset against taxes its payment of 
        an assessment of the Minnesota life and health guaranty 
        association, and the association pays the insurer a refund with 
        respect to the assessment under Minnesota Statutes 1992, section 
        61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 
        reduces the insurer's carryforward credit under paragraph (c).  
        If the refund exceeds the amount of the carryforward credit, the 
        excess amount must be repaid to the state by the insurers to the 
        extent of the offset in the manner the commissioner requires. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 26.  Minnesota Statutes 2000, section 298.01, 
        subdivision 3b, is amended to read: 
           Subd. 3b.  [DEDUCTIONS.] (a) For purposes of determining 
        taxable income under subdivision 3, the deductions from gross 
        income include only those expenses necessary to convert raw ores 
        to marketable quality.  Such expenses include costs associated 
        with refinement but do not include expenses such as 
        transportation, stockpiling, marketing, or marine insurance that 
        are incurred after marketable ores are produced, unless the 
        expenses are included in gross income. 
           (b) The provisions of section 290.01, subdivisions 19c, 
        clauses (7) (6) and (11) (10), and 19d, clauses (7) and 
        (12) (11), are not used to determine taxable income. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 27.  Minnesota Statutes 2000, section 298.01, 
        subdivision 4c, is amended to read: 
           Subd. 4c.  [SPECIAL DEDUCTIONS.] (a) For purposes of 
        determining taxable income under subdivision 4, the following 
        modifications are allowed: 
           (1) the provisions of section 290.01, subdivisions 19c, 
        clauses (7) (6) and (11) (10), and 19d, clauses (7) and 
        (12) (11), are not used to determine taxable income; and 
           (2) for assets placed in service before January 1, 1990, 
        the deduction for depreciation will be the same amount allowed 
        under chapter 290, except that after an asset has been fully 
        depreciated for federal income tax purposes any remaining 
        depreciable basis is allowed as a deduction using the 
        straight-line method over the following number of years: 
           (i) three-year property, one year; 
           (ii) five- and seven-year property, two years; 
           (iii) ten-year property, five years; and 
           (iv) all other property, seven years. 
           No deduction is allowed if an asset is fully depreciated 
        for occupation tax purposes before January 1990. 
           (b) For purposes of determining the deduction allowed under 
        paragraph (a), clause (2), the remaining depreciable basis of 
        property placed in service before January 1, 1990, is calculated 
        as follows: 
           (1) the adjusted basis of the property on December 31, 
        1989, which was used to calculate the hypothetical corporate 
        franchise tax under Minnesota Statutes 1988, section 298.40, 
        including salvage value; less 
           (2) deductions for depreciation allowed under section 
        290.01, subdivision 19e. 
           (c) The basis for determining gain or loss on sale or 
        disposition of assets placed in service before January 1, 1990, 
        is the basis determined under paragraph (b), less the deductions 
        allowed under paragraph (a), clause (2). 
           (d) The amount of net operating loss incurred in a taxable 
        year beginning before January 1, 1990, that may be carried over 
        to a taxable year beginning after December 31, 1989, is the 
        amount of net operating loss carryover determined in the 
        calculation of the hypothetical corporate franchise tax under 
        Minnesota Statutes 1988, sections 298.40 and 298.402. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 28.  Minnesota Statutes 2000, section 469.1732, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORITY.] A business that conducts 
        business activity within a border city development zone 
        designated under section 469.1731 may qualify for the property 
        tax exemption under section 272.0212, the corporate franchise 
        tax credit under subdivision 2, and the sales tax exemption 
        under section 469.1734, subdivision 6. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 29.  [APPROPRIATION; TAXPAYER ASSISTANCE.] 
           (a) $200,000 is appropriated for fiscal year 2002 from the 
        general fund to the commissioner of revenue to make grants to 
        one or more nonprofit organizations, qualifying under section 
        501(c)(3) of the Internal Revenue Code of 1986, to coordinate, 
        facilitate, encourage, and aid in the provision of taxpayer 
        assistance services.  This appropriation is available for fiscal 
        years 2002 and 2003 and does not become a part of the base.  
           (b) For purposes of this section, "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 Internal 
        Revenue Service. 
           Sec. 30.  [REPEALER.] 
           (a) Minnesota Statutes 2000, section 290.0673, is repealed 
        effective for tax years beginning after December 31, 2001. 
           (b) Minnesota Statutes 2000, sections 290.06, subdivision 
        26; 290.095, subdivision 1a; 290.21, subdivision 3; 290.35; and 
        290.9726, subdivision 7, are repealed effective for tax years 
        beginning after December 31, 2000. 
           (c) Minnesota Statutes 2000, sections 469.1732, subdivision 
        2; and 469.1734, subdivision 4, are repealed effective the day 
        following final enactment. 

                                   ARTICLE 10 
                                 FEDERAL UPDATE 
           Section 1.  Minnesota Statutes 2000, 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, 1999 June 
        15, 2001. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 2.  Minnesota Statutes 2000, section 290.01, 
        subdivision 6b, is amended to read: 
           Subd. 6b.  [FOREIGN OPERATING CORPORATION.] The term 
        "foreign operating corporation," when applied to a corporation, 
        means a domestic corporation with the following characteristics: 
           (1) it is part of a unitary business at least one member of 
        which is taxable in this state; and 
           (2) it is not a foreign sales corporation under section 922 
        of the Internal Revenue Code, as amended through December 31, 
        1999, for the taxable year; and 
           (3) either (i) the average of the percentages of its 
        property and payrolls assigned to locations inside the United 
        States and the District of Columbia, excluding the commonwealth 
        of Puerto Rico and possessions of the United States, as 
        determined under section 290.191 or 290.20, is 20 percent or 
        less; or (ii) it has in effect a valid election under section 
        936 of the Internal Revenue Code. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2001. 
           Sec. 3.  Minnesota Statutes 2000, 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 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, and the 
        provisions of section 318 of the Consolidated Appropriation Act 
        of 2001, Public Law Number 106-554, 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, 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, and the provisions of section 316 of the Consolidated 
        Appropriation Act of 2001, Public Law Number 106-554, 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, 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 
        106-170, the provisions of the Installment Tax Correction Act of 
        2000, Public Law Number 106-573, and the provisions of section 
        309 of the Consolidated Appropriation Act of 2001, Public Law 
        Number 106-554, 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 provisions of the FSC Repeal and Extraterritorial 
        Income Exclusion Act of 2000, Public Law Number 106-519, shall 
        become effective at the time it became effective for federal 
        purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1999, shall be in effect for taxable years 
        beginning after December 31, 1999.  The provisions of sections 
        306 and 401 of the Consolidated Appropriation Act of 2001, 
        Public Law Number 106-554, and the provision of section 
        632(b)(2)(A) of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001, Public Law Number 107-16, shall 
        become effective at the same time it became effective for 
        federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 2000, shall be in effect for taxable years 
        beginning after December 31, 2000.  The provisions of sections 
        659a and 671 of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001, Public Law Number 107-16, shall 
        become effective at the same time it became effective for 
        federal purposes. 
           The Internal Revenue Code of 1986, as amended through June 
        15, 2001, shall be in effect for taxable years beginning after 
        December 31, 2001. 
           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. 
           Sec. 4.  Minnesota Statutes 2000, 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; and 
           (15) the amount of net income excluded under section 114 of 
        the Internal Revenue Code. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 5.  Minnesota Statutes 2000, 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; 
           (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; and 
           (18) for a corporation whose foreign sales corporation, as 
        defined in section 922 of the Internal Revenue Code, constituted 
        a foreign operating corporation during the taxable years ending 
        during calendar year 1992 and a return was filed by August 15, 
        1996, claiming the deduction under this subdivision for income 
        received from the foreign operating corporation, an amount equal 
        to 1.23 multiplied by the amount of income excluded under 
        section 114 of the Internal Revenue Code, provided the income is 
        not income of a foreign operating company. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2000. 
           Sec. 6.  Minnesota Statutes 2000, 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, 1999 June 
        15, 2001. 
           [EFFECTIVE DATE.] This section is effective at the same 
        time and in the same manner as the federal changes made by the 
        FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 
        Public Law Number 106-519, and the Consolidated Appropriation 
        Act of 2001, Public Law Number 106-554, becomes effective. 
           Sec. 7.  Minnesota Statutes 2000, 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 1.9125 percent of the first $4,460 of earned income.  The 
        credit is reduced by 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 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 5.73 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 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 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) For tax years beginning after December 31, 2001, and 
        before December 31, 2004, the $5,770 in paragraph (b) is 
        increased to $6,770, the $15,080 in paragraph (c) is increased 
        to $16,080, and the $17,890 in paragraph (d) is increased to 
        $18,890 for married taxpayers filing joint returns. 
           (h) For tax years beginning after December 31, 2004, and 
        before December 31, 2007, the $5,770 in paragraph (b) is 
        increased to $7,770, the $15,080 in paragraph (c) is increased 
        to $17,080, and the $17,890 in paragraph (d) is increased to 
        $19,890 for married taxpayers filing joint returns. 
           (i) For tax years beginning after December 31, 2007, and 
        before December 31, 2010, the $5,770 in paragraph (b) is 
        increased to $8,770, the $15,080 in paragraph (c) is increased 
        to $18,080 and the $17,890 in paragraph (d) is increased to 
        $20,890 for married taxpayers filing joint returns. 
           (j) 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 tax years 
        beginning after December 31, 2001. 
           Sec. 8.  Minnesota Statutes 2000, section 290.0671, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [DEFINITIONS.] For purposes of this section, the 
        terms "qualifying child," "earned income," and "modified 
        adjusted gross income" have the meanings given in section 32(c) 
        of the Internal Revenue Code. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2001. 
           Sec. 9.  Minnesota Statutes 2000, 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, 1999 June 15, 2001. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 10.  Minnesota Statutes 2000, 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, 
        1999 2000. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 

                                   ARTICLE 11 
                          CIVIL AND CRIMINAL PENALTIES 
           Section 1.  Minnesota Statutes 2000, 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, 2a, 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 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 tax years 
        beginning after December 31, 2000, and for estate tax returns 
        due after January 1, 2002. 
           Sec. 2.  Minnesota Statutes 2000, 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 a corporate franchise, fiduciary 
        income, mining company, estate, partnership, S corporation, or 
        nonresident entertainer tax is not paid within the time 
        specified for payment, a penalty of six percent is added to the 
        unpaid tax, except that if a corporation or mining company meets 
        the requirements of section 289A.19, subdivision 2, the penalty 
        is not imposed.  
           (b) For the taxes listed in paragraph (a), in addition to 
        the penalty in that paragraph, whether imposed or not, if a 
        return or amended return is filed after the due date, without 
        regard to extensions, and any tax reported as remaining due is 
        not remitted with the return or amended return, a penalty of 
        five percent of the tax not paid is added to the tax.  If the 
        commissioner issues an order assessing additional tax for a tax 
        listed in paragraph (a), and the tax is not paid within 60 days 
        after the mailing of the order or, if appealed, within 60 days 
        after final resolution of the appeal, a penalty of five percent 
        of the unpaid tax is added to the tax. 
           (c) 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.  If an individual income tax is not paid 
        within the time specified for payment, a penalty of four percent 
        is added to the unpaid tax.  There is a presumption of 
        reasonable cause for the late payment if the individual:  (i) 
        pays by the due date of the return at least 90 percent of the 
        amount of tax, after credits other than withholding and 
        estimated payments, shown owing on the return; (ii) files the 
        return within six months after the due date; and (iii) pays the 
        remaining balance of the reported tax when the return is filed. 
           (d) If the commissioner issues an order assessing 
        additional individual income tax, and the tax is not paid within 
        60 days after the mailing of the order or, if appealed, within 
        60 days after final resolution of the appeal, a penalty of four 
        percent of the unpaid tax is added to the tax.  
           (b) (e) 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 tax years 
        beginning after December 31, 2000, and for estate tax returns 
        due after January 1, 2002. 
           Sec. 3.  Minnesota Statutes 2000, section 289A.60, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
        a taxpayer fails to make and file a return other than an income 
        tax return of an individual, a withholding return, or sales or 
        use tax return, within the time prescribed or an extension, a 
        penalty is added to the tax.  The penalty is three percent of 
        the amount of tax not paid on or before the date prescribed for 
        payment of the tax including any extensions if the failure is 
        for not more than 30 days, with an additional five percent of 
        the amount of tax remaining unpaid during each additional 30 
        days or fraction of 30 days, during which the failure continues, 
        not exceeding 23 percent in the aggregate. 
           If a taxpayer fails to file an individual income tax return 
        within six months after the date prescribed for filing of the 
        return, a penalty of ten percent of the amount of tax not paid 
        by the end of that six-month period is added to the tax.  
           If a taxpayer fails to file a withholding or sales or use 
        tax return within the time prescribed, including an extension, a 
        penalty of five percent of the amount of tax not timely paid by 
        the end of that period is added to the tax.  
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2000, and for estate tax returns 
        due after January 1, 2002. 
           Sec. 4.  Minnesota Statutes 2000, section 289A.60, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [PENALTIES FOR EXTENDED DELINQUENCY.] (a) If an 
        individual income tax is not paid within 180 days after the date 
        of filing of a return or, in the case of taxes assessed by the 
        commissioner, within 180 days after the assessment date or, if 
        appealed, within 180 days after final resolution of the appeal, 
        an extended delinquency penalty of five percent of the tax 
        remaining unpaid is added to the amount due.  
           (b) If a corporate franchise, fiduciary income, mining 
        company, estate, partnership, S corporation, or nonresident 
        entertainer tax return is not filed within 30 days after written 
        demand for the filing of a delinquent return, an extended 
        delinquency penalty of five percent of the tax not paid prior to 
        the demand is added to the tax, or in the case of an individual 
        income tax return, a minimum penalty of $100 or the five percent 
        penalty is imposed, whichever amount is greater. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2000, and for estate tax returns 
        due after January 1, 2002. 
           Sec. 5.  Minnesota Statutes 2000, section 289A.60, 
        subdivision 7, is amended to read: 
           Subd. 7.  [PENALTY FOR FRIVOLOUS RETURN.] If an individual 
        a taxpayer files what purports to be a tax return required by 
        chapter 290 or a claim for refund but which does not contain 
        information on which the substantial correctness of 
        the assessment purported return or claim for refund may be 
        judged or contains information that on its face shows that the 
        assessment purported return or claim for refund is substantially 
        incorrect and the conduct is due to a position that is frivolous 
        or a desire that appears on the purported return or claim for 
        refund to delay or impede the administration of Minnesota tax 
        laws, then the individual shall pay a penalty of $500.  In a 
        proceeding involving the issue of whether or not a person is 
        liable for this penalty, the burden of proof is on the 
        commissioner.  
           [EFFECTIVE DATE.] This section is effective for returns or 
        claims for refunds filed on or after the day following final 
        enactment. 
           Sec. 6.  Minnesota Statutes 2000, section 297F.20, 
        subdivision 3, is amended to read: 
           Subd. 3.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
        person who files with the commissioner a return, report, or 
        other document, or who maintains or provides invoices subject to 
        review by the commissioner under this chapter, known by the 
        person to be fraudulent or false concerning a material matter, 
        is guilty of a felony. 
           (b) A person who knowingly aids or assists in, or advises 
        in the preparation or presentation of a return, report, invoice, 
        or other document that is fraudulent or false concerning a 
        material matter, whether or not the falsity or fraud is 
        committed with the knowledge or consent of the person authorized 
        or required to present the return, report, invoice, or other 
        document, is guilty of a felony. 
           [EFFECTIVE DATE.] This section is effective for crimes 
        occurring on or after August 1, 2001. 
           Sec. 7.  [APPROPRIATION.] 
           $545,000 in fiscal year 2003 is appropriated from the 
        general fund to the commissioner of revenue to implement 
        sections 2 to 4.  $520,000 of the appropriation is for a 
        one-time expenditure related to system programming costs.  
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 8.  [REPEALER.] 
           Minnesota Statutes 2000, section 289A.60, subdivision 3, is 
        repealed. 
           [EFFECTIVE DATE.] This section is effective for tax years 
        beginning after December 31, 2000, and for estate tax returns 
        due after January 1, 2002. 

                                   ARTICLE 12 
                              SALES AND USE TAXES 
           Section 1.  Minnesota Statutes 2000, 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) For a fiscal year ending before July 1, 2002, 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 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 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. 
           Sec. 2.  Minnesota Statutes 2000, section 289A.31, 
        subdivision 7, is amended to read: 
           Subd. 7.  [SALES AND USE TAX.] (a) The sales and use tax 
        required to be collected by the retailer under chapter 297A 
        constitutes a debt owed by the retailer to Minnesota, and the 
        sums collected must be held as a special fund in trust for the 
        state of Minnesota. 
           A retailer who does not maintain a place of business within 
        this state as defined by section 297A.21, subdivision 1, shall 
        not be indebted to Minnesota for amounts of tax that it was 
        required to collect but did not collect unless the retailer knew 
        or had been advised by the commissioner of its obligation to 
        collect the tax.  
           (b) The use tax required to be paid by a purchaser is a 
        debt owed by the purchaser to Minnesota. 
           (c) The tax imposed by chapter 297A, and interest and 
        penalties, is a personal debt of the individual required to file 
        a return from the time the liability arises, irrespective of 
        when the time for payment of that liability occurs.  The debt 
        is, in the case of the executor or administrator of the estate 
        of a decedent and in the case of a fiduciary, that of the 
        individual in an official or fiduciary capacity unless the 
        individual has voluntarily distributed the assets held in that 
        capacity without reserving sufficient assets to pay the tax, 
        interest, and penalties, in which case the individual is 
        personally liable for the deficiency. 
           (d) Liability for payment of sales and use taxes includes 
        any responsible person or entity described in the personal 
        liability provisions of section 270.101. 
           (e) Any amounts collected, even if erroneously or illegally 
        collected, from a purchaser under a representation that they are 
        taxes imposed under chapter 297A are state funds from the time 
        of collection and must be reported on a return filed with the 
        commissioner.  The amounts collected are not subject to refund 
        unless the seller submits written evidence to the commissioner 
        that the tax and any interest earned on the tax has been or will 
        be refunded or credited to the purchaser by the seller. 
           (f) The tax imposed under chapter 297A on sales of tickets 
        to the premises of or events sponsored by the state agricultural 
        society and conducted on the state fairgrounds during the period 
        of the annual state fair may be retained by the state 
        agricultural society if the funds are used and matched as 
        required under section 37.13, subdivision 2. 
           [EFFECTIVE DATE.] This section is effective for amounts 
        collected after June 30, 2001. 
           Sec. 3.  Minnesota Statutes 2000, section 289A.50, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REFUND OF SALES TAX TO VENDORS; LIMITATION.] If 
        a vendor has collected from a purchaser and remitted to the 
        state a tax on a transaction that is not subject to the tax 
        imposed by chapter 297A, the tax is refundable to the vendor 
        only if and to the extent that it the tax and any interest 
        earned on the tax is credited to amounts due to the vendor by 
        the purchaser or returned to the purchaser by the vendor.  In 
        addition to the requirements of subdivision 1, a claim for 
        refund under this subdivision must state in writing that the tax 
        and interest earned on the tax has been or will be refunded or 
        credited to the purchaser by the vendor. 
           [EFFECTIVE DATE.] This section is effective for claims for 
        refunds after June 30, 2001. 
           Sec. 4.  [295.60] [SPECIAL FUR CLOTHING TAX.] 
           Subdivision 1.  [IMPOSITION.] If clothing made of fur is 
        not subject to the sales tax under chapter 297A, a tax is 
        imposed on each furrier equal to 6.5 percent of gross revenues 
        from retail sales in Minnesota of clothing made from fur. 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given. 
           (b) "Commissioner" means the commissioner of revenue. 
           (c) "Furrier" means a retailer that sells clothing made of 
        fur. 
           (d) "Clothing made of fur" means articles of clothing made 
        of fur on the hide or pelt, and articles of clothing of which 
        such fur is the component material of chief value, but only if 
        such value is more than three times the value of the next most 
        valuable material.  
           (e) "Retail sale" has the meaning given in section 297A.61, 
        subdivision 4. 
           Subd. 3.  [PAYMENT.] (a) Each furrier shall make estimated 
        payments of the taxes for the calendar year in quarterly 
        installments to the commissioner by April 15, July 15, October 
        15, and January 15 of the following calendar year. 
           (b) Estimated tax payments are not required if: 
           (1) the tax for the current calendar year is less than 
        $500; or 
           (2) the tax for the previous calendar year is less than 
        $500, if the taxpayer had a tax liability and was doing business 
        the entire year. 
           (c) Underpayment of estimated installments bear interest at 
        the rate specified in section 270.75, from the due date of the 
        payment until paid or until the due date of the annual return, 
        whichever comes first.  An underpayment of an estimated 
        installment is the difference between the amount paid and the 
        lesser of (1) 90 percent of one-quarter of the tax for the 
        calendar year or (2) one-quarter of the total tax for the 
        previous calendar year if the taxpayer had a tax liability and 
        was doing business the entire year. 
           Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
        with an aggregate tax liability of $120,000 or more during a 
        fiscal year ending June 30 must remit all liabilities by 
        electronic means. 
           Subd. 5.  [ANNUAL RETURN.] The taxpayer must file an annual 
        return reconciling the estimated payments by March 15 of the 
        following calendar year. 
           Subd. 6.  [FORM OF RETURNS.] The estimated payments and 
        annual return must contain the information and be in the form 
        prescribed by the commissioner. 
           Subd. 7.  [APPLICATION OF OTHER CHAPTERS.] Unless 
        specifically provided otherwise by this section, the 
        enforcement, interest, and penalty provisions under chapter 294, 
        appeal provisions in sections 289A.43 and 289A.65, criminal 
        penalties in section 289A.63, refunds provisions in section 
        289A.50, and collection and rulemaking provisions under chapter 
        270, apply to a liability for the taxes imposed under this 
        section. 
           Subd. 8.  [INTEREST ON OVERPAYMENTS.] Interest must be paid 
        on an overpayment refunded or credited to the taxpayer from the 
        date of payment of the tax until the date the refund is paid or 
        credited.  For purposes of this subdivision, the date of payment 
        is the due date of the return or the date of actual payment of 
        the tax, whichever is later. 
           Subd. 9.  [DEPOSIT OF REVENUES.] The commissioner shall 
        deposit all revenues, including penalties and interest, derived 
        from the tax imposed by this section in the general fund. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after December 31, 2001. 
           Sec. 5.  Minnesota Statutes 2000, section 297A.01, 
        subdivision 5, is amended to read: 
           Subd. 5.  "Storage" includes any keeping or retention in 
        Minnesota for any purpose except sale in the regular course of 
        business or subsequent use solely outside Minnesota of tangible 
        personal property. 
           [EFFECTIVE DATE; INSTRUCTIONS TO REVISOR.] (a) This section 
        is effective for storage, use, or consumption occurring after 
        June 30, 2001, but refunds, based on claims that meet the 
        requirements of all other applicable provisions of law, shall be 
        issued for and tax not imposed on tangible personal property 
        stored in Minnesota after June 30, 1997, and before July 1, 
        2001, if (1) the property was kept or retained in a public 
        warehouse or in a common carrier's or for-hire carrier's storage 
        facility, (2) the property was shipped or brought into Minnesota 
        by common carrier or for-hire carrier for the purpose of 
        subsequently being transported outside Minnesota, and (3) the 
        property is thereafter used solely outside Minnesota or in the 
        course of interstate commerce. 
           (b) In the next edition of Minnesota Statutes, the revisor 
        shall codify the amendment to this section in Minnesota 
        Statutes, section 297A.61, subdivision 5. 
           Sec. 6.  Minnesota Statutes 2000, section 297A.25, 
        subdivision 28, is amended to read: 
           Subd. 28.  [WASTE PROCESSING EQUIPMENT.] The gross receipts 
        from the sale of and storage, use, or consumption of equipment 
        used for processing solid or hazardous waste at a resource 
        recovery facility, as defined in section 115A.03, subdivision 
        28, are exempt, including pollution control equipment at a 
        resource recovery facility that burns refuse-derived fuel or 
        mixed municipal solid waste as its primary fuel.  An electric 
        generation facility that processes and utilizes waste tires as 
        its primary fuel is a resource recovery facility for the 
        purposes of this section.  
           [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 
        effective for purchases and sales made after the date of final 
        enactment.  In the next edition of Minnesota Statutes, the 
        revisor of statutes shall codify the amendment to this section 
        in section 297A.68, subdivision 24. 
           Sec. 7.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PERSON.] (a) "Person" includes any individual, 
        and any or group or and any combination of individuals, 
        groups, or individuals and groups acting as a unit, and the 
        plural as well as the singular number.  
           (b) Person includes a firm, partnership, joint venture, 
        limited liability company, association, cooperative, social 
        club, fraternal organization, municipal or private corporation 
        whether or not organized for profit, estates, trusts, business 
        trusts estate, trust, business trust, receiver, trustee, 
        syndicate, the United States, and a state and its political 
        subdivisions.  
           (c) Person includes, but is not limited to, directors and 
        officers of corporations, governors and managers of a limited 
        liability company, or members of partnerships who, either 
        individually or jointly with others, have the control, 
        supervision, or responsibility of filing returns and making 
        payment of the amount of tax imposed by this chapter. 
           (d) Person also includes any agent or consignee of any 
        individual or organization enumerated listed in this subdivision.
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 8.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
        include, but are not limited to, each of the transactions listed 
        in this subdivision. 
           (b) Sale and purchase include: 
           (1) any transfer of title or possession, or both, of 
        tangible personal property, whether absolutely or conditionally, 
        for a consideration in money or by exchange or barter; and 
           (2) the leasing of or the granting of a license to use or 
        consume, for a consideration in money or by exchange or barter, 
        tangible personal property, other than a manufactured home used 
        for residential purposes for a continuous period of 30 days or 
        more. 
           (c) Sale and purchase include the production, fabrication, 
        printing, or processing of tangible personal property for a 
        consideration for consumers who furnish either directly or 
        indirectly the materials used in the production, fabrication, 
        printing, or processing. 
           (d) Sale and purchase include the furnishing, preparing, or 
        serving for a consideration of food or drinks.  Notwithstanding 
        section 297A.67, subdivision 2, taxable food or drinks 
        include includes, but are is not limited to, the following: 
           (1) prepared food or drinks sold by the retailer for 
        immediate consumption on the retailer's premises.  Food and 
        drinks sold within a building or grounds that require an 
        admission charge for entrance are presumed to be sold for 
        consumption on the premises; 
           (2) food or drinks prepared by the retailer for immediate 
        consumption either on or off the retailer's premises.  For 
        purposes of this subdivision, "food or drinks prepared for 
        immediate consumption" means any food product upon which an act 
        of preparation including, but not limited to, cooking, mixing, 
        sandwich making, blending, heating, or pouring has been 
        performed by the retailer so the food product may be immediately 
        consumed by the purchaser; 
           (3) ice cream, ice milk, frozen yogurt products, or frozen 
        novelties sold in single or individual servings including, but 
        not limited to, cones, sundaes, and snow cones; 
           (4) (2) soft drinks and other beverages, including all 
        carbonated and noncarbonated beverages or drinks sold in liquid 
        form, but not including beverages or drinks which contain milk 
        or milk products, beverages or drinks containing 15 or more 
        percent fruit juice, and noncarbonated and noneffervescent 
        bottled water sold in individual containers of one-half gallon 
        or more in size; 
           (5) gum, (3) candy, and candy products; and 
           (6) ice; 
           (7) (4) all food sold from through vending machines;.  
           (8) all food for immediate consumption sold from concession 
        stands and vehicles; 
           (9) party trays; 
           (10) all meals and single servings of packaged snack food 
        sold in restaurants and bars; and 
           (11) bakery products that are: 
           (i) prepared by the retailer for consumption on the 
        retailer's premises; 
           (ii) sold at a place that charges admission; 
           (iii) sold from vending machines; or 
           (iv) sold in single or individual servings from concession 
        stands, vehicles, bars, and restaurants.  
           For purposes of this paragraph, "single or individual 
        servings" does not include products when sold in bulk containers 
        or bulk packaging.  
           For purposes of this paragraph, "premises" means the total 
        space and facilities, including buildings, grounds, and parking 
        lots that are made available or that are available for use by 
        the retailer or customer for the purpose of sale or consumption 
        of prepared food and drinks.  The premises of a caterer is the 
        place where the catered food or drinks are served. 
           (e) A sale and a purchase includes the furnishing for a 
        consideration of electricity, gas, water, or steam for use or 
        consumption within this state or local exchange telephone 
        service, intrastate toll service, and interstate toll service, 
        if that service originates from and is charged to a telephone 
        located in this state.  Telephone service includes (1) paging 
        services, and (2) private communication service, as defined in 
        United States Code, title 26, section 4252(d), except for 
        private communication service purchased by an agent acting on 
        behalf of the state lottery.  Telephone service does not include 
        services purchased with a prepaid telephone calling card.  The 
        furnishing for a consideration of access to telephone services 
        by a hotel to its guests is a sale.  The furnishing for a 
        consideration of items listed in this paragraph by a municipal 
        corporation is a sale. 
           (f) A sale and a purchase includes the transfer for a 
        consideration of computer software.  
           (g) A sale and a purchase includes the furnishing for a 
        consideration of taxable services as defined in subdivision 
        16. the following services: 
           (1) the privilege of admission to places of amusement, 
        recreational areas, or athletic events, and the making available 
        of amusement devices, tanning facilities, reducing salons, steam 
        baths, turkish baths, health clubs, and spas or athletic 
        facilities; 
           (2) lodging and related services by a hotel, rooming house, 
        resort, campground, motel, or trailer camp and the granting of 
        any similar license to use real property other than the renting 
        or leasing of it for a continuous period of 30 days or more; 
           (3) parking services, whether on a contractual, hourly, or 
        other periodic basis, except for parking at a meter; 
           (4) the granting of membership in a club, association, or 
        other organization if: 
           (i) the club, association, or other organization makes 
        available for the use of its members sports and athletic 
        facilities, without regard to whether a separate charge is 
        assessed for use of the facilities; and 
           (ii) use of the sports and athletic facility is not made 
        available to the general public on the same basis as it is made 
        available to members.  
        Granting of membership means both one-time initiation fees and 
        periodic membership dues.  Sports and athletic facilities 
        include golf courses; tennis, racquetball, handball, and squash 
        courts; basketball and volleyball facilities; running tracks; 
        exercise equipment; swimming pools; and other similar athletic 
        or sports facilities; and 
           (5) services as provided in this clause: 
           (i) laundry and dry cleaning services including cleaning, 
        pressing, repairing, altering, and storing clothes, linen 
        services and supply, cleaning and blocking hats, and carpet, 
        drapery, upholstery, and industrial cleaning.  Laundry and dry 
        cleaning services do not include services provided by coin 
        operated facilities operated by the customer; 
           (ii) motor vehicle washing, waxing, and cleaning services, 
        including services provided by coin operated facilities operated 
        by the customer, and rustproofing, undercoating, and towing of 
        motor vehicles; 
           (iii) building and residential cleaning, maintenance, and 
        disinfecting and exterminating services; 
           (iv) detective, security, burglar, fire alarm, and armored 
        car services; but not including services performed within the 
        jurisdiction they serve by off-duty licensed peace officers as 
        defined in section 626.84, subdivision 1, or services provided 
        by a nonprofit organization for monitoring and electronic 
        surveillance of persons placed on in-home detention pursuant to 
        court order or under the direction of the Minnesota department 
        of corrections; 
           (v) pet grooming services; 
           (vi) lawn care, fertilizing, mowing, spraying and sprigging 
        services; garden planting and maintenance; tree, bush, and shrub 
        pruning, bracing, spraying, and surgery; indoor plant care; 
        tree, bush, shrub, and stump removal; and tree trimming for 
        public utility lines.  Services performed under a construction 
        contract for the installation of shrubbery, plants, sod, trees, 
        bushes, and similar items are not taxable; 
           (vii) massages, except when provided by a licensed health 
        care facility or professional or upon written referral from a 
        licensed health care facility or professional for treatment of 
        illness, injury, or disease; and 
           (viii) the furnishing of lodging, board, and care services 
        for animals in kennels and other similar arrangements, but 
        excluding veterinary and horse boarding services. 
           In applying the provisions of this chapter, the terms 
        "tangible personal property" and "sales at retail" include 
        taxable services and the provision of taxable services, unless 
        specifically provided otherwise.  Services performed by an 
        employee for an employer are not taxable.  Services performed by 
        a partnership or association for another partnership or 
        association are not taxable if one of the entities owns or 
        controls more than 80 percent of the voting power of the equity 
        interest in the other entity.  Services performed between 
        members of an affiliated group of corporations are not taxable.  
        For purposes of this section, "affiliated group of corporations" 
        includes those entities that would be classified as members of 
        an affiliated group under United States Code, title 26, section 
        1504, and that are eligible to file a consolidated tax return 
        for federal income tax purposes. 
           (h) A sale and a purchase includes the furnishing for a 
        consideration of tangible personal property or taxable services 
        by the United States or any of its agencies or 
        instrumentalities, or the state of Minnesota, its agencies, 
        instrumentalities, or political subdivisions. 
           (i) A sale and a purchase includes the furnishing for a 
        consideration of telecommunications services, including cable 
        television services and direct satellite services.  
        Telecommunications services are taxed to the extent allowed 
        under federal law if those services: 
           (1) either (i) originate and terminate in this state; or 
        (ii) originate in this state and terminate outside the state and 
        the service is charged to a telephone number customer located in 
        this state or to the account of any transmission instrument in 
        this state; or (iii) originate outside this state and terminate 
        in this state and the service is charged to a telephone number 
        customer located in this state or to the account of any 
        transmission instrument in this state; or 
           (2) are rendered by providing a private communications 
        service for which the customer has one or more locations within 
        Minnesota connected to the service and the service is charged to 
        a telephone number customer located in this state or to the 
        account of any transmission instrument in this state. 
           All charges for mobile telecommunications services, as 
        defined in United States Code, title 4, section 124, are deemed 
        to be provided by the customer's home service provider and 
        sourced to the customer's place of primary use and are subject 
        to tax based upon the customer's place of primary use in 
        accordance with the Mobile Telecommunications Sourcing Act, 
        United States Code, title 4, sections 116 to 126.  All other 
        definitions and provisions of the Mobile Telecommunications 
        Sourcing Act as provided in United States Code, title 4, are 
        hereby adopted. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001, except that paragraph (d) is 
        effective for sales and purchases occurring after December 31, 
        2001, and paragraph (i) and the amendments to paragraph (e) are 
        effective for sales and purchases made after July 31, 2001. 
           Sec. 9.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 4, is amended to read: 
           Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a any 
        sale, lease, or rental for any purpose other than resale in the 
        regular course of business, sublease, or subrent.  
           (b) A sale of property used by the owner only by leasing it 
        to others or by holding it in an effort to lease it, and put to 
        no use by the owner other than resale after the lease or effort 
        to lease, is a sale of property for resale.  
           (c) A sale of master computer software that is purchased 
        and used to make copies for sale or lease is a sale of property 
        for resale.  
           (d) A sale of building materials, supplies, and equipment 
        to owners, contractors, subcontractors, or builders for the 
        erection of buildings or the alteration, repair, or improvement 
        of real property is a retail sale in whatever quantity sold, 
        whether the sale is for purposes of resale in the form of real 
        property or otherwise.  
           (e) A sale of carpeting, linoleum, or similar floor 
        covering to a person who provides for installation of the floor 
        covering is a retail sale and not a sale for resale since a sale 
        of floor covering which includes installation is a contract for 
        the improvement of real property. 
           (f) A sale of shrubbery, plants, sod, trees, and similar 
        items to a person who provides for installation of the items is 
        a retail sale and not a sale for resale since a sale of 
        shrubbery, plants, sod, trees, and similar items that includes 
        installation is a contract for the improvement of real property. 
           (g) A sale of tangible personal property that is awarded as 
        prizes is a retail sale and is not considered a sale of property 
        for resale. 
           (h) A sale of tangible personal property utilized or 
        employed in the furnishing or providing of services under 
        subdivision 16 3, paragraph (b) (g), clause (1), including, but 
        not limited to, property given as promotional items, is a retail 
        sale and is not considered a sale of property for resale. 
           (i) A sale of tangible personal property used in conducting 
        lawful gambling under chapter 349 or the state lottery under 
        chapter 349A, including, but not limited to, property given as 
        promotional items, is a retail sale and is not considered a sale 
        of property for resale. 
           (j) A sale of machines, equipment, or devices that are used 
        to furnish, provide, or dispense goods or services, including, 
        but not limited to, coin-operated devices, is a retail sale and 
        is not considered a sale of property for resale. 
           (k) In the case of a lease, a retail sale occurs when an 
        obligation to make a lease payment becomes due under the terms 
        of the agreement or the trade practices of the lessor. 
           (l) In the case of a conditional sales contract, a retail 
        sale occurs upon the transfer of title or possession of the 
        tangible personal property. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001, except that paragraph (a) is 
        effective January 1, 2002. 
           Sec. 10.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 6, is amended to read: 
           Subd. 6.  [USE.] (a) "Use" includes the exercise of a right 
        or power incident to the ownership of any interest in tangible 
        personal property, or taxable services, purchased from a 
        retailer, other than the sale of that property in the regular 
        course of business.  
           (b) Use includes the consumption of printed materials in 
        the creation of nontaxable advertising that is distributed, 
        either directly or indirectly, within Minnesota. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 11.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 7, is amended to read: 
           Subd. 7.  [SALES PRICE.] (a) "Sales price" means the total 
        consideration for a retail sale, valued in money, whether paid 
        in money or by barter or exchange. the measure subject to sales 
        tax, and means the total amount of consideration, including 
        cash, credit, property, and services, for which personal 
        property or services are sold, leased, or rented, valued in 
        money, whether received in money or otherwise, without any 
        deduction for the following: 
           (1) the seller's cost of the property sold; 
           (2) the cost of materials used, labor or service cost, 
        interest, losses, all costs of transportation to the seller, all 
        taxes imposed on the seller, and any other expenses of the 
        seller; 
           (3) charges by the seller for any services necessary to 
        complete the sale, other than delivery and installation charges; 
           (4) delivery charges; 
           (5) installation charges; and 
           (6) the value of exempt property given to the purchaser 
        when taxable and exempt personal property have been bundled 
        together and sold by the seller as a single product or piece of 
        merchandise. 
           (b) Sales price includes: 
           (1) the cost of the property sold, cost of materials used, 
        labor or service cost, interest, or discount allowed after the 
        sale is consummated; 
           (2) the cost of transportation incurred prior to the time 
        of sale; 
           (3) any amount for which credit is given by the seller to 
        the purchaser; 
           (4) charges for services that are part of a sale; or 
           (5) any other expense whatsoever. 
           (c) (b) Sales price does not include the following: 
           (1) an amount allowed as credit for tangible personal 
        property taken in trade for resale discounts, including cash, 
        terms, or coupons that are not reimbursed by a third party and 
        that are allowed by the seller and taken by a purchaser on a 
        sale; 
           (2) charges of up to 15 percent in lieu of tips if the 
        charges are separately stated interest, financing, and carrying 
        charges from credit extended on the sale of personal property or 
        services, if the amount is separately stated on the invoice, 
        bill of sale, or similar document given to the purchaser; and 
           (3) interest, financing, or carrying charges if the charges 
        are separately stated; any taxes legally imposed directly on the 
        consumer that are separately stated on the invoice, bill of 
        sale, or similar document given to the purchaser. 
           (4) charges for labor or services used in installing or 
        applying the property sold if the charges are separately stated; 
           (5) transportation charges if the transportation occurs 
        after the retail sale of the property if the charges are 
        separately stated; 
           (6) cash discounts allowed and taken on sales or the amount 
        refunded either in cash or in credit for property returned by 
        purchasers; 
           (7) the rental motor vehicle tax imposed under section 
        297A.64; or 
           (8) the amount of any tax imposed by the United States on 
        communications services under United States Code, title 26, 
        section 4251(a). 
           (d) Notwithstanding paragraph (c), "sales price," for 
        purposes of sales of ready-mixed concrete sold from a 
        ready-mixed concrete truck, includes any transportation, 
        delivery, or other service charges, and no deduction is allowed 
        for those charges, whether or not the charges are separately 
        stated.  
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 12.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 9, is amended to read: 
           Subd. 9.  [RETAILER AND SELLER.] "Retailer" and "seller" 
        means every any person engaged in making retail sales, leases, 
        or rentals of personal property or services. 
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 13.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 10, is amended to read: 
           Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
        personal property" means corporeal personal property of any 
        kind, including property that is to become real property as a 
        result of incorporation, attachment, or installation following 
        its acquisition. 
           (b) Tangible personal property includes, but is not limited 
        to: 
           (1) computer software, whether contained on tape, discs, 
        cards, or other devices; and 
           (2) prepaid telephone calling cards.  
           (c) Tangible personal property does not include: 
           (1) large ponderous machinery and equipment used in a 
        business or production activity which at common law would be 
        considered to be real property; 
           (2) property which is subject to an ad valorem property 
        tax; 
           (3) property described in section 272.02, subdivision 9, 
        clauses (a) to (d); and 
           (4) property described in section 272.03, subdivision 2, 
        clauses (3) and (5). 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 14.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 12, is amended to read: 
           Subd. 12.  [FARM MACHINERY.] (a) "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, plants, forage, grains, and bees 
        and apiary products.  
           (b) Farm machinery includes: 
           (1) machinery for the preparation, seeding, or cultivation 
        of soil for growing agricultural crops and sod, for the 
        harvesting and threshing of agricultural products, or for the 
        harvesting or mowing of sod; 
           (2) barn cleaners, milking systems, grain dryers, automatic 
        feeding systems including stationary feed bunks, 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; 
           (7) aquaculture production equipment as defined in 
        subdivision 13; and 
           (8) equipment used for maple syrup harvesting.  
           (c) Farm machinery does not include: 
           (1) repair or replacement parts; 
           (2) tools, shop equipment, grain bins, feed bunks, fencing 
        material except fencing material covered by paragraph (b), 
        clause (5), communication equipment, and other farm supplies; 
           (3) motor vehicles taxed under chapter 297B; 
           (4) snowmobiles or snow blowers; or 
           (5) lawn mowers except those used in the production of sod 
        for sale, or garden-type tractors or garden tillers. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after July 31, 2001. 
           Sec. 15.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 14, is amended to read: 
           Subd. 14.  [LEASING; LEASE.] "Leasing" includes all 
        transfers of possession or the use of tangible personal property 
        by the lessee for a consideration, if title remains with the 
        lessor at the end of the lease.  For purposes of this chapter, A 
        lease of tangible personal property is a series of sales 
        transactions that impose upon the lessee multiple payment 
        obligations.  "Leasing" does not include a transaction defined 
        under subdivision 15.  
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 16.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 17, is amended to read: 
           Subd. 17.  [COMPUTER SOFTWARE.] "Computer software" means a 
        computer program, either in the form of written procedures or in 
        the form of storage media on which, or in which, the program is 
        recorded contained on tapes, discs, cards, or another device, or 
        any required documentation or manuals designed to facilitate the 
        use of the computer program.  For purposes of this subdivision: 
           (1) "Storage media" includes punched cards, tapes, discs, 
        diskettes, or drums on which computer programs may be embodied 
        or stored; 
           (2) "Computer" does not include tape-controlled automatic 
        drilling, milling, or other manufacturing machinery or 
        equipment; and 
           (3) (2) "Computer program" means information and directions 
        that dictate the function performed by data processing 
        equipment.  It includes the complete plan for the solution of a 
        problem, such as the complete sequence of automatic data 
        processing equipment instructions necessary to solve a problem 
        and includes both systems and application programs and 
        subdivisions, such as assemblers, compilers, routines, 
        generators, and utility programs.  Computer program includes a 
        "canned" or prewritten computer program that is held or existing 
        for general or repeated sale or lease, even if the prewritten or 
        "canned" program was initially developed on a custom basis or 
        for in-house use. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 17.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 19, is amended to read: 
           Subd. 19.  [COMMON FOR-HIRE CARRIER.] "Common For-hire 
        carrier" means a person engaged in transportation for hire of 
        tangible personal property by motor vehicle, if the person:. 
           (1) has a certificate or permit or has completed a 
        registration process that authorizes for-hire transportation of 
        property from the United States Department of Transportation, 
        the transportation regulation board, or the department of 
        transportation; 
           (2) is transporting commodities defined as "exempt" in 
        for-hire transportation; or 
           (3) transports tangible personal property pursuant to a 
        contract with a person described in clause (1) or (2). 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 18.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 22, is amended to read: 
           Subd. 22.  [INTERNAL REVENUE CODE.] Unless specifically 
        provided otherwise, "Internal Revenue Code" means the Internal 
        Revenue Code of 1986, as amended through December 31, 1999 2000. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 19.  Minnesota Statutes 2000, section 297A.61, 
        subdivision 23, is amended to read: 
           Subd. 23.  [UNITED STATES CODE.] Unless specifically 
        provided otherwise, "United States Code" means the United States 
        Code as amended through December 31, 1999 2000. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 20.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 24.  [TELECOMMUNICATIONS SERVICES.] (a) 
        "Telecommunications services" means the transmission, 
        conveyance, or routing of voice, data, audio, video, or any 
        other information or signals to a point, or between or among 
        points, by or through any electronic, satellite, optical, 
        microwave, or other medium or method now in existence or 
        hereafter devised, regardless of the protocol used for such 
        transmission, conveyance, or routing.  
           (b) Telecommunications services includes the furnishing for 
        consideration of access to telephone services by a hotel to its 
        guests.  
           (c) Telecommunications services do not include: 
           (1) services purchased with a prepaid telephone calling 
        card; 
           (2) private communication service purchased by an agent 
        acting on behalf of the state lottery; 
           (3) information services; and 
           (4) purchases of telecommunications when the purchaser uses 
        the purchased services as a component part of or integrates such 
        service into another telecommunications service that is sold by 
        the purchaser in the normal course of business.  
           (d) For purposes of this subdivision, "information 
        services" means the offering of the capability for generating, 
        acquiring, storing, transforming, processing, retrieving, 
        utilizing, or making available information. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases occurring after July 31, 2001. 
           Sec. 21.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 25.  [CABLE TELEVISION SERVICE.] "Cable television 
        service" means the transmission of video, audio, or other 
        programming service to purchasers, and the subscriber 
        interaction, if any, required for the selection or use of the 
        programming service, regardless of whether the programming is 
        transmitted over facilities owned or operated by the cable 
        service provider or over facilities owned or operated by one or 
        more dealers of communications services.  The term includes 
        point-to-multipoint distribution services by which programming 
        is transmitted or broadcast by microwave or other equipment 
        directly to the subscriber's premises.  The term includes basic, 
        extended, premium, pay-per-view, digital, and music services. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases occurring after July 31, 2001. 
           Sec. 22.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 26.  [PRIVATE COMMUNICATION SERVICE.] "Private 
        communication service" means a communication service furnished 
        to a subscriber which entitles the subscriber to:  
           (1) exclusive or priority use of any communication channel 
        or group of channels; 
           (2) the use of an intercommunication system for the 
        subscriber's stations, or regardless of whether the channel, 
        group of channels, or intercommunication system may be connected 
        through switching; 
           (3) the switching capacity, extension lines and stations, 
        or other associated services that are provided in connection 
        with, and are necessary or unique to the use of, channels or 
        systems described in clause (1); or 
           (4) any combination of tunneling, encryption, 
        authentication, and access control technologies and services 
        used to carry traffic over the Internet, a managed Internet 
        provider network or provider's backbone. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases occurring after July 31, 2001. 
           Sec. 23.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 27.  [DIRECT SATELLITE SERVICE.] "Direct satellite 
        service" means programming transmitted or broadcast by satellite 
        directly to the subscriber's premises without the use of ground 
        receiving or distribution equipment, except at the subscriber's 
        premises or in the uplink process to the satellite. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases occurring after July 31, 2001. 
           Sec. 24.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 28.  [PURCHASE PRICE.] "Purchase price" means the 
        measure subject to the use tax and has the same meaning as 
        "sales price." 
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 25.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 29.  [STATE.] Unless specifically provided otherwise, 
        "state" means any state of the United States and the District of 
        Columbia. 
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 26.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 30.  [DELIVERY CHARGES.] "Delivery charges" means 
        charges by the seller for preparation and delivery to a location 
        designated by the purchaser of personal property or services 
        including, but not limited to, transportation, shipping, 
        postage, handling, crating, and packing. 
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 27.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 31.  [PREPARED FOOD.] "Prepared food" means (i) food 
        sold in a heated state or heated by the seller; (ii) two or more 
        food ingredients mixed or combined by the seller for sale as a 
        single item; or (iii) food sold with eating utensils provided by 
        the seller, including plates, knives, forks, spoons, glasses, 
        cups, napkins, or straws.  Prepared food does not include food 
        that is sliced, repackaged, or pasteurized by the seller. 
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 28.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 32.  [SOFT DRINKS.] "Soft drinks" means nonalcoholic 
        beverages that contain natural or artificial sweeteners.  Soft 
        drinks do not include beverages that contain milk or milk 
        products; soy, rice, or similar milk substitutes; or greater 
        than 50 percent vegetable or fruit juice by volume. 
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 29.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read:  
           Subd. 33.  [CANDY.] "Candy" means a preparation of sugar, 
        honey, or other natural or artificial sweeteners in combination 
        with chocolate, fruits, nuts, or other ingredients or flavorings 
        in the form of bars, drops, or pieces.  Candy does not include 
        any preparation containing flour and must require no 
        refrigeration. 
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 30.  Minnesota Statutes 2000, section 297A.61, is 
        amended by adding a subdivision to read: 
           Subd. 34.  [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 
        through vending machines" means food dispensed from a machine or 
        other mechanical device that accepts payment. 
           [EFFECTIVE DATE.] This section is effective January 1, 2002.
           Sec. 31.  Minnesota Statutes 2000, section 297A.64, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ADMINISTRATION.] The retailer shall report and 
        pay the tax imposed in subdivision 1 to the commissioner of 
        revenue with the taxes imposed in this chapter.  The tax imposed 
        in subdivision 1 and the fee imposed in subdivision 2 are is 
        subject to the same interest, penalty, and other provisions 
        provided for sales and use taxes under chapter 289A and this 
        chapter.  The commissioner has the same powers to assess and 
        collect the tax and fee that are given the commissioner in 
        chapters 270 and 289A and this chapter to assess and collect 
        sales and use tax. 
           [EFFECTIVE DATE.] This section is effective for leases 
        entered into after December 31, 2005. 
           Sec. 32.  Minnesota Statutes 2000, section 297A.64, 
        subdivision 4, is amended to read: 
           Subd. 4.  [EXEMPTIONS.] (a) The tax and the fee imposed by 
        this section do does not apply to a lease or rental of (1) a 
        vehicle to be used by the lessee to provide a licensed taxi 
        service; (2) a hearse or limousine used in connection with a 
        burial or funeral service; or (3) a van designed or adapted 
        primarily for transporting property rather than passengers. 
           (b) The lessor may elect not to charge the fee imposed in 
        subdivision 2 if in the previous calendar year the lessor had no 
        more than 20 vehicles available for lease that would have been 
        subject to tax under this section, or no more than $50,000 in 
        gross receipts that would have been subject to tax under this 
        section.  
           [EFFECTIVE DATE.] This section is effective for leases 
        entered into after December 31, 2005. 
           Sec. 33.  Minnesota Statutes 2000, section 297A.66, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) "Retailer maintaining a 
        place of business in this state," or a similar term, means a 
        retailer: 
           (1) having or maintaining within this state, directly or by 
        a subsidiary, an office, place of distribution, sales or sample 
        room or place, warehouse, or other place of business; or 
           (2) having a representative, agent, salesperson, canvasser, 
        or solicitor operating in this state under the authority of the 
        retailer or its subsidiary, for any purpose, including the 
        repairing, selling, delivering, installing, or soliciting of 
        orders for the retailer's goods or services, or the leasing of 
        tangible personal property located in this state, whether the 
        place of business or agent, representative, salesperson, 
        canvasser, or solicitor is located in the state permanently or 
        temporarily, or whether or not the retailer or subsidiary is 
        authorized to do business in this state. 
           (b) "Destination of a sale" means the location to which the 
        retailer makes delivery of the property sold, or causes the 
        property to be delivered, to the purchaser of the property, or 
        to the agent or designee of the purchaser.  The delivery may be 
        made by any means, including the United States Postal Service, a 
        common carrier, or a contract for-hire carrier. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 34.  Minnesota Statutes 2000, section 297A.66, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 
        THIS STATE.] (a) To the extent allowed by the United States 
        Constitution and the laws of the United States, a retailer 
        making retail sales from outside this state to a destination 
        within this state and not maintaining a place of business in 
        this state shall collect sales and use taxes and remit them to 
        the commissioner under section 297A.77, if the retailer engages 
        in the regular or systematic soliciting of sales from potential 
        customers in this state by: 
           (1) distribution, by mail or otherwise, 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 in which this 
        state is included as part 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 telegraphy, telephone, 
        computer database, cable, optic, microwave, or other 
        communication system. 
           This paragraph (a) must be construed without regard to the 
        state from which distribution of the materials originated or in 
        which they were prepared.  
           (b) The location within or without this state of 
        independent vendors independent of the retailer that provide 
        products or services to the retailer in connection with its 
        solicitation of customers within this state, including such 
        products and services as creation of copy, printing, 
        distribution, and recording, is not considered in determining 
        whether the retailer is required to collect tax.  
           (c) A retailer not maintaining a place of business in this 
        state is presumed, subject to rebuttal, to be engaged in regular 
        solicitation within this state if it engages in any of the 
        activities in paragraph (a) and: 
           (1) makes 100 or more retail sales from outside this state 
        to destinations in this state during a period of 12 consecutive 
        months; or 
           (2) makes ten or more retail sales totaling more than 
        $100,000 from outside this state to destinations in this state 
        during a period of 12 consecutive months. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 35.  [297A.668] [SOURCING OF SALE; SITUS IN THIS 
        STATE.] 
           Subdivision 1.  [SOURCING RULES.] (a) The following 
        provisions apply regardless of the characterization of a product 
        as tangible personal property, a digital good, or a service; but 
        do not apply to telecommunications services, or the sales of 
        motor vehicles, watercraft, aircraft, modular homes, 
        manufactured homes, or mobile homes.  These provisions only 
        apply to determine a seller's obligation to pay or collect and 
        remit a sales or use tax with respect to the seller's sale of a 
        product.  These provisions do not affect the obligation of a 
        seller as purchaser to remit tax on the use of the product. 
           (b) When the product is received by the purchaser at a 
        business location of the seller, the sale is sourced to that 
        business location. 
           (c) When the product is not received by the purchaser at a 
        business location of the seller, the sale is sourced to the 
        location where receipt by the purchaser or the donee designated 
        by the purchaser occurs, including the location indicated by 
        instructions for delivery to the purchasers or the purchaser's 
        donee, known to the seller. 
           (d) When paragraphs (b) and (c) do not apply, the sale is 
        sourced to the location indicated by an address for the 
        purchaser that is available from the business records of the 
        seller that are maintained in the ordinary course of the 
        seller's business, when use of this address does not constitute 
        bad faith. 
           (e) When paragraphs (b), (c), and (d) do not apply, the 
        sale is sourced to the location indicated by an address for the 
        purchaser obtained during the consummation of the sale, 
        including the address of a purchaser's payment instrument if no 
        other address is available, when use of this address does not 
        constitute bad faith. 
           (f) When paragraphs (b), (c), (d), and (e) do not apply, 
        including the circumstance where the seller is without 
        sufficient information to apply the previous paragraphs, then 
        the location is determined by the address from which tangible 
        personal property was shipped, from which the digital good was 
        first available for transmission by the seller, or from which 
        the service was provided. 
           Subd. 2.  [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 
        provisions of subdivision 1, a business purchaser that is not a 
        holder of a direct pay permit that knows at the time of its 
        purchase of a digital good or service that the digital good or 
        service will be concurrently available for use in more than one 
        taxing jurisdiction shall deliver to the seller in conjunction 
        with its purchase a multiple points of use exemption certificate 
        disclosing this fact. 
           (b) Upon receipt of the multiple points of use exemption 
        certificate, the seller is relieved of the obligation to 
        collect, pay, or remit the applicable tax and the purchaser is 
        obligated to collect, pay, or remit the applicable tax on a 
        direct pay basis. 
           (c) A purchaser delivering the multiple points of use 
        exemption certificate may use any reasonable, but consistent and 
        uniform, method of apportionment that is supported by the 
        purchaser's business records as they exist at the time of the 
        consummation of the sale. 
           (d) The multiple points of use exemption certificate 
        remains in effect for all future sales by the seller to the 
        purchaser until it is revoked in writing. 
           (e) A holder of a direct pay permit is not required to 
        deliver a multiple points or use exemption certificate to the 
        seller.  A direct pay permit holder shall follow the provisions 
        of paragraph (c) in apportioning the tax due on a digital good 
        or a service that will be concurrently available for use in more 
        than one taxing jurisdiction. 
           Subd. 3.  [DEFINITION OF TERMS.] For purposes of this 
        section, the terms "receive" and "receipt" mean taking 
        possession of tangible personal property, making first use of 
        services, or taking possession of making first use of digital 
        goods, whichever occurs first.  The terms receive and receipt do 
        not include possession by a carrier for hire on behalf of the 
        purchaser. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after December 31, 2001. 
           Sec. 36.  Minnesota Statutes 2000, section 297A.67, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FOOD PRODUCTS AND FOOD INGREDIENTS.] 
        Food products including, but not limited to, cereal and cereal 
        products, butter, cheese, milk and milk products, oleomargarine, 
        meat and meat products, fish and fish products, eggs and egg 
        products, vegetables and vegetable products, fruit and fruit 
        products, spices and salt, sugar and sugar products, coffee and 
        coffee substitutes, tea, and cocoa and cocoa products and food 
        ingredients are exempt.  For purposes of this subdivision, 
        "food" and "food ingredients" mean substances, whether in 
        liquid, concentrated, solid, frozen, dried, or dehydrated form, 
        that are sold for ingestion or chewing by humans and are 
        consumed for their taste or nutritional value.  Food and food 
        ingredients do not include candy, soft drinks, food sold through 
        vending machines, and prepared foods.  Food and food ingredients 
        do not include alcoholic beverages, dietary supplements, and 
        tobacco.  For purposes of this subdivision, "alcoholic 
        beverages" means beverages that are suitable for human 
        consumption and contain one-half of one percent or more of 
        alcohol by volume.  For purposes of this subdivision, "tobacco" 
        means cigarettes, cigars, chewing or pipe tobacco, or any other 
        item that contains tobacco.  For purposes of this subdivision, 
        "dietary supplements" means any product, other than tobacco, 
        intended to supplement the diet that: 
           (1) contains one or more of the following dietary 
        ingredients: 
           (i) a vitamin; 
           (ii) a mineral; 
           (iii) an herb or other botanical; 
           (iv) an amino acid; 
           (v) a dietary substance for use by humans to supplement the 
        diet by increasing the total dietary intake; and 
           (vi) a concentrate, metabolite, constituent, extract, or 
        combination of any ingredient described in items (i) to (v); 
           (2) is intended for ingestion in tablet, capsule, powder, 
        softgel, gelcap, or liquid form, or if not intended for 
        ingestion in such form, is not represented as conventional food 
        and is not represented for use as a sole item of a meal or of 
        the diet; and 
           (3) is required to be labeled as a dietary supplement, 
        identifiable by the supplement facts box found on the label and 
        as required pursuant to Code of Federal Regulations, title 21, 
        section 101.36. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after December 31, 2001. 
           Sec. 37.  Minnesota Statutes 2000, section 297A.67, 
        subdivision 8, is amended to read: 
           Subd. 8.  [CLOTHING.] (a) Clothing and wearing apparel, 
        including sewing materials to be directly incorporated into 
        wearing apparel, are is exempt.  For purposes of this 
        subdivision, clothing and wearing apparel do not include the 
        following: 
           (1) articles designed primarily for use while engaging in a 
        specific sport or recreational activity that are not also worn 
        for general use; 
           (2) articles designed primarily to provide safety or 
        protection against injury while the user is engaged in 
        industrial or general job activities; 
           (3) all articles commonly or commercially known as jewelry 
        including, but not limited to, watches; 
           (4) nonprescription optical glasses of any sort; 
           (5) articles made entirely of fur on the hide or pelt, or 
        partially of such fur if the value of the fur is more than three 
        times the value of the next most valuable component material; 
           (6) perfume, lotions, creams, dyes, or other substances 
        that are applied to the skin or the hair; and 
           (7) luggage, bags, purses, wallets, or cases of any 
        sort. "clothing" means all human wearing apparel suitable for 
        general use. 
           (b) Clothing includes, but is not limited to, aprons, 
        household and shop; athletic supporters; baby receiving 
        blankets; bathing suits and caps; beach capes and coats; belts 
        and suspenders; boots; coats and jackets; costumes; children and 
        adult diapers, including disposable; ear muffs; footlets; formal 
        wear; garters and garter belts; girdles; gloves and mittens for 
        general use; hats and caps; hosiery; insoles for shoes; lab 
        coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 
        sandals; scarves; shoes and shoe laces; slippers; sneakers; 
        socks and stockings; steel-toed boots; underwear; uniforms, 
        athletic and nonathletic; and wedding apparel. 
           (c) Clothing does not include the following: 
           (1) belt buckles sold separately; 
           (2) costume masks sold separately; 
           (3) patches and emblems sold separately; 
           (4) sewing equipment and supplies, including but not 
        limited to, knitting needles, patterns, pins, scissors, sewing 
        machines, sewing needles, tape measures, and thimbles; 
           (5) sewing materials that become part of clothing, 
        including but not limited to, buttons, fabric, lace, thread, 
        yarn, and zippers; 
           (6) clothing accessories or equipment; 
           (7) sports or recreational equipment; and 
           (8) protective equipment. 
        Clothing also does not include apparel made from fur if a 
        uniform definition of "apparel made from fur" is developed by 
        the member states of the Streamlined Sales and Use Tax Agreement.
           For purposes of this subdivision, "clothing accessories or 
        equipment" means incidental items worn on the person or in 
        conjunction with clothing.  Clothing accessories include, but 
        are not limited to, briefcases; cosmetics; hair notions, 
        including barrettes, hair bows, and hairnets; handbags; 
        handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 
        wallets; watches; and wigs and hairpieces.  "Sports or 
        recreational equipment" means items designed for human use and 
        worn in conjunction with an athletic or recreational activity 
        that are not suitable for general use.  Sports and recreational 
        equipment includes, but is not limited to, ballet and tap shoes; 
        cleated or spiked athletic shoes; baseball, bowling, boxing, 
        hockey, and golf gloves; goggles; hand and elbow guards; life 
        preservers and vests; mouth guards; roller and ice skates; shin 
        guards; shoulder pads; ski boots; waders; and wetsuits and 
        fins.  "Protective equipment" means items for human wear and 
        designed as protection of the wearer against injury or disease 
        or as protection against damage or injury of other persons or 
        property but not suitable for general use.  Protective equipment 
        includes, but is not limited to, breathing masks; clean room 
        apparel and equipment; ear and hearing protectors; face shields; 
        finger guards; hard hats; helmets; paint or dust respirators; 
        protective gloves; safety glasses and goggles; safety belts; 
        tool belts; and welders gloves and masks. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after December 31, 2001. 
           Sec. 38.  Minnesota Statutes 2000, section 297A.67, 
        subdivision 23, is amended to read: 
           Subd. 23.  [OCCASIONAL SALES.] Isolated and occasional 
        sales in Minnesota not made in the normal course of business, 
        and of selling that kind of property or service are exempt.  The 
        storage, use, or consumption of property or services resulting 
        from such sales, are acquired as a result of such a sale is 
        exempt.  This exemption does not apply to sales of tangible 
        personal property primarily used in a trade or business. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 39.  Minnesota Statutes 2000, section 297A.67, 
        subdivision 24, is amended to read: 
           Subd. 24.  [CONSTITUTIONAL PROHIBITIONS.] The gross 
        receipts from The sale of and the storage, use, or other 
        consumption in Minnesota of tangible personal property, tickets, 
        or admissions, electricity, gas, or local exchange telephone 
        service or services, that the state of Minnesota is prohibited 
        from taxing under the Constitution or laws of the United States 
        or under the Constitution of Minnesota, are exempt. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 40.  Minnesota Statutes 2000, section 297A.67, 
        subdivision 25, is amended to read: 
           Subd. 25.  [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.61, 
        subdivision 16 3, paragraph (g), clause (6) (5), item (vi), 
        and "cemetery" means a cemetery for human burial. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 41.  Minnesota Statutes 2000, section 297A.67, is 
        amended by adding a subdivision to read: 
           Subd. 26.  [TRADE ALLOWANCE.] The amount allowed as a 
        credit against the sales price for tangible personal property 
        taken in trade for resale is exempt. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after December 31, 2001. 
           Sec. 42.  Minnesota Statutes 2000, section 297A.67, is 
        amended by adding a subdivision to read: 
           Subd. 27.  [SEWING MATERIALS.] Sewing materials are exempt. 
        For purposes of this subdivision "sewing materials" mean fabric, 
        thread, zippers, interfacing, buttons, trim, and other items 
        that are usually directly incorporated into the construction of 
        clothing, regardless of whether it is actually used for making 
        clothing.  It does not include batting, foam, or fabric 
        specifically manufactured for arts and craft projects, or other 
        materials for craft projects. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after December 31, 2001. 
           Sec. 43.  Minnesota Statutes 2000, section 297A.67, is 
        amended by adding a subdivision to read: 
           Subd. 28.  [AMBULANCE SUPPLIES, PARTS, AND EQUIPMENT.] The 
        following sales to or use by an ambulance service licensed under 
        section 144E.10 are exempt: 
           (1) supplies and equipment used to provide medical care; 
        and 
           (2) repair and replacement parts for ambulances. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after July 31, 2001. 
           Sec. 44.  Minnesota Statutes 2000, section 297A.67, is 
        amended by adding a subdivision to read: 
           Subd. 29.  [ENERGY EFFICIENT PRODUCTS.] (a) A residential 
        lighting fixture or a compact fluorescent bulb is exempt if it 
        has an energy star label. 
           (b) The following products are exempt if they have an 
        energyguide label that indicates that the product meets or 
        exceeds the standards listed below: 
           (1) an electric heat pump hot water heater with an energy 
        factor of at least 1.9; 
           (2) a natural gas water heater with an energy factor of at 
        least 0.62; and 
           (3) a natural gas furnace with an annual fuel utilization 
        efficiency greater than 92 percent. 
           (c) A photovoltaic device is exempt.  For purposes of this 
        subdivision, "photovoltaic device" means a solid-state 
        electrical device, such as a solar module, that converts light 
        directly into direct current electricity of voltage-current 
        characteristics that are a function of the characteristics of 
        the light source and the materials in and design of the device.  
        A "solar module" is a photovoltaic device that produces a 
        specified power output under defined test conditions, usually 
        composed of groups of solar cells connected in series, in 
        parallel, or in series-parallel combinations. 
           (d) For purposes of this subdivision, "energy star label" 
        means the label granted to certain products that meet United 
        States Environmental Protection Agency and United States 
        Department of Energy criteria for energy efficiency.  For 
        purposes of this subdivision, "energyguide label" means the 
        label that the United State Federal Trade Commissioner requires 
        manufacturers to apply to certain appliances under United States 
        Code, title 16, part 305. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after July 31, 2001, and before August 1, 2005. 
           Sec. 45.  Minnesota Statutes 2000, section 297A.68, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
        (a) Materials stored, used, or consumed in industrial production 
        of personal property intended to be sold ultimately at retail 
        are exempt, whether or not the item so used becomes an 
        ingredient or constituent part of the property produced.  
        Materials that qualify for this exemption include, but are not 
        limited to, the following: 
           (1) chemicals, including chemicals used for cleaning food 
        processing machinery and equipment; 
           (2) materials, including chemicals, fuels, and electricity 
        purchased by persons engaged in industrial production to treat 
        waste generated as a result of the production process; 
           (3) fuels, electricity, gas, and steam used or consumed in 
        the production process, except that electricity, gas, or steam 
        used for space heating, cooling, or lighting is exempt only if 
        (i) it is in excess of the average climate control or lighting 
        for the production area, and (ii) it is necessary to produce 
        that particular industrial product; 
           (4) petroleum products and lubricants; 
           (5) packaging materials, including returnable containers 
        used in packaging food and beverage products; 
           (6) accessory tools, equipment, and other items that are 
        separate detachable units with an ordinary useful life of less 
        than 12 months used in producing a direct effect upon the 
        product; and 
           (7) the following materials, tools, and equipment used in 
        metalcasting:  crucibles, thermocouple protection sheaths and 
        tubes, stalk tubes, refractory materials, molten metal filters 
        and filter boxes, degassing lances, and base blocks. 
           (b) This exemption does not include: 
           (1) machinery, equipment, implements, tools, accessories, 
        appliances, contrivances and furniture and fixtures, except 
        those listed in paragraph (a), clause (6); and 
           (2) petroleum and special fuels used in producing or 
        generating power for propelling ready-mixed concrete trucks on 
        the public highways of this state. 
           (c) Industrial production includes, 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.  Industrial production does not include 
        painting, cleaning, repairing or similar processing of property 
        except as part of the original manufacturing process.  
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 46.  Minnesota Statutes 2000, section 297A.68, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
        SERVICES.] (a) Materials stored, used, or consumed in providing 
        a taxable service listed in section 297A.61, subdivision 16 3, 
        paragraph (g), clause (5), intended to be sold ultimately at 
        retail are exempt. 
           (b) This exemption includes, but is not limited to: 
           (1) chemicals, lubricants, packaging materials, seeds, 
        trees, fertilizers, and herbicides, if these items are used or 
        consumed in providing the taxable service; 
           (2) chemicals used to treat waste generated as a result of 
        providing the taxable service; 
           (3) accessory tools, equipment, and other items that are 
        separate detachable units used in providing the service and that 
        have an ordinary useful life of less than 12 months; and 
           (4) fuel, electricity, gas, and steam used or consumed in 
        the production process, except that electricity, gas, or steam 
        used for space heating, cooling, or lighting is exempt only if 
        (i) it is in excess of average climate control or lighting, and 
        (ii) it is necessary to produce that particular taxable service. 
           (c) This exemption does not include machinery, equipment, 
        implements, tools, accessories, appliances, contrivances, 
        furniture, and fixtures used in providing the taxable service. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        purchases made after June 30, 2001. 
           Sec. 47.  Minnesota Statutes 2000, section 297A.68, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
        exempt.  The tax must be imposed and collected as if the rate 
        under section 297A.62, subdivision 1, applied, and then refunded 
        in the manner provided in section 297A.75. 
           "Capital equipment" means machinery and equipment purchased 
        or leased, and used in this state by the purchaser or lessee 
        primarily for manufacturing, fabricating, mining, or refining 
        tangible personal property to be sold ultimately at retail. 
           Capital equipment means if the machinery and equipment is 
        essential to the integrated production process of manufacturing, 
        fabricating, mining, or refining.  Capital equipment also 
        includes machinery and equipment used to electronically transmit 
        results retrieved by a customer of an online computerized data 
        retrieval system. 
           (b) Capital equipment includes, but is not limited to: 
           (1) machinery and equipment used to operate, control, or 
        regulate the production equipment; 
           (2) machinery and equipment used for research and 
        development, design, quality control, and testing