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Minnesota Session Laws - 2003, 1st Special Session

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

                              CHAPTER 21-H.F.No. 7 
                  An act relating to the financing and operation of 
                  state and local government; providing for job 
                  opportunity building zones; providing for a 
                  biotechnology and health sciences industry zone; 
                  changing income, sales and use, motor vehicle sales, 
                  motor vehicle registration, property, cigarette and 
                  tobacco, liquor, mortgage registry and deed, and other 
                  taxes; updating references to the Internal Revenue 
                  Code; changing accelerated sales tax liability 
                  provisions and extending the requirements to other 
                  taxes; changing or providing property tax and sales 
                  tax exemptions; requiring payment of certain lawful 
                  gambling taxes; altering the computation and payments 
                  of intergovernmental aids; imposing levy limits; 
                  modifying truth in taxation requirements; providing 
                  economic development incentives; changing tax 
                  increment financing requirements; providing powers to 
                  certain cities and counties; authorizing a special 
                  taxing district; providing for collection of certain 
                  debts and charges; providing for payments into and 
                  transfers among certain funds and accounts; providing 
                  for distribution of certain revenues and funds; 
                  regulating limited used vehicle licenses; making 
                  certain changes relating to the taconite assistance 
                  area; authorizing municipalities to collect certain 
                  charges as a special assessment; changing certain 
                  requirements relating to the metropolitan mosquito 
                  control district; regulating tax preparers; providing 
                  for studies; providing penalties; appropriating money; 
                  amending Minnesota Statutes 2002, sections 3.986, 
                  subdivision 4; 4A.02; 16A.152, subdivisions 1, 1b, 2; 
                  18B.07, subdivision 2, as amended; 62J.692, 
                  subdivision 4, by adding a subdivision; 168.27, 
                  subdivision 4a; 270.60, subdivision 4; 270A.03, 
                  subdivision 2; 270A.07, subdivisions 1, 2; 272.02, 
                  subdivision 25, by adding subdivisions; 272.029, by 
                  adding a subdivision; 273.11, subdivision 13; 273.13, 
                  subdivision 25; 273.1341, as added; 273.1398, 
                  subdivisions 4a, 4c, 6, 8; 275.025, subdivision 1; 
                  275.065, subdivision 3; 275.066; 275.70, subdivision 
                  5; 275.71, subdivisions 2, 4, 5, 6; 275.72, 
                  subdivision 3; 275.73, subdivision 2; 275.74, 
                  subdivision 3; 276A.01, subdivision 2; 287.12; 287.29, 
                  subdivision 1; 287.31, by adding a subdivision; 
                  289A.02, subdivision 7, as amended; 289A.08, 
                  subdivision 16, as amended; 289A.20, subdivision 4; 
                  289A.31, subdivision 7; 289A.60, subdivision 15; 
                  290.01, subdivisions 19, as amended, 19b, 29, 31, as 
                  amended; 290.06, subdivision 2c, by adding 
                  subdivisions; 290.067, subdivision 1; 290.0671, 
                  subdivision 1; 290.091, subdivision 2; 290.0921, 
                  subdivision 3; 290.0922, subdivisions 2, 3; 290A.03, 
                  subdivision 15, as amended; 297A.68, by adding 
                  subdivisions; 297A.70, subdivisions 8, 10, 14, 16; 
                  297A.71, by adding a subdivision; 297B.01, subdivision 
                  7; 297B.03; 297F.09, subdivisions 1, 2, by adding a 
                  subdivision; 297F.10, subdivision 1, as amended; 
                  297G.01, by adding a subdivision; 297G.03, subdivision 
                  1; 297G.09, by adding a subdivision; 298.018, 
                  subdivisions 1, 2; 298.22, subdivisions 2, 8; 
                  298.2211, subdivisions 1, 2; 298.2213, subdivision 3; 
                  298.2214, subdivisions 1, 3; 298.223, subdivision 1; 
                  298.28, subdivisions 7, 11; 298.292, subdivision 2; 
                  298.293; 298.298; 349.16, by adding a subdivision; 
                  429.101, subdivision 1; 469.169, by adding a 
                  subdivision; 469.174, subdivisions 6, as amended, 10, 
                  by adding a subdivision; 469.1763, subdivisions 2, 4; 
                  469.177, subdivision 1; 473.167, subdivision 3; 
                  473.249, subdivision 1; 473.253, subdivision 1; 
                  473.704, subdivision 17, as amended; 474A.061, 
                  subdivision 1, as amended; 477A.011, subdivisions 34, 
                  36, by adding subdivisions; 477A.013, subdivisions 8, 
                  9; 477A.03, subdivision 2, by adding subdivisions; 
                  611.27, subdivisions 13, 15; Laws 1980, chapter 511, 
                  section 1, subdivision 2, as amended; Laws 1980, 
                  chapter 511, section 2, as amended; Laws 1993, chapter 
                  375, article 9, section 46, subdivision 2, as amended; 
                  Laws 1998, chapter 389, article 16, section 35, 
                  subdivision 1, as amended; Laws 1999, chapter 243, 
                  article 4, section 19, as amended; Laws 2001, First 
                  Special Session chapter 5, article 12, section 95, as 
                  amended; Laws 2001, First Special Session chapter 5, 
                  article 20, section 22; Laws 2002, chapter 377, 
                  article 3, section 15; 2003 First Special Session H. 
                  F. No. 1, article 2, section 118, subdivision 6; 
                  proposing coding for new law in Minnesota Statutes, 
                  chapters 270; 469; 477A; repealing Minnesota Statutes 
                  2002, sections 37.13, subdivision 2; 272.02, 
                  subdivision 26; 273.138, subdivisions 2, 3, 6; 
                  273.1398, subdivisions 2, 2c, 4d; 273.166; 275.065, 
                  subdivision 3a; 325E.112, subdivision 2a; 477A.011, 
                  subdivision 37; 477A.0121; 477A.0122; 477A.0123; 
                  477A.0132; 477A.03, subdivisions 3, 4; 477A.06; 
                  477A.07. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1 
                         JOB OPPORTUNITY BUILDING ZONES 
           Section 1.  Minnesota Statutes 2002, section 272.02, is 
        amended by adding a subdivision to read: 
           Subd. 64.  [JOB OPPORTUNITY BUILDING ZONE PROPERTY.] (a) 
        Improvements to real property, and personal property, classified 
        under section 273.13, subdivision 24, and located within a job 
        opportunity building zone, designated under section 469.314, are 
        exempt from ad valorem taxes levied under chapter 275. 
           (b) Improvements to real property, and tangible personal 
        property, of an agricultural production facility located within 
        an agricultural processing facility zone, designated under 
        section 469.314, is exempt from ad valorem taxes levied under 
        chapter 275. 
           (c) For property to qualify for exemption under paragraph 
        (a), the occupant must be a qualified business, as defined in 
        section 469.310. 
           (d) The exemption applies beginning for the first 
        assessment year after designation of the job opportunity 
        building zone by the commissioner of trade and economic 
        development.  The exemption applies to each assessment year that 
        begins during the duration of the job opportunity building zone 
        and to property occupied by July 1 of the assessment year by a 
        qualified business.  This exemption does not apply to: 
           (1) the levy under section 475.61 or similar levy 
        provisions under any other law to pay general obligation bonds; 
        or 
           (2) a levy under section 126C.17, if the levy was approved 
        by the voters before the designation of the job opportunity 
        building zone. 
           [EFFECTIVE DATE.] This section is effective beginning for 
        property taxes assessed in 2004, payable in 2005. 
           Sec. 2.  Minnesota Statutes 2002, section 272.029, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [EXEMPTION.] The tax imposed under this section 
        does not apply to electricity produced by wind energy conversion 
        systems located in a job opportunity building zone, designated 
        under section 469.314, for the duration of the zone.  The 
        exemption applies beginning for the first calendar year after 
        designation of the zone and applies to each calendar year that 
        begins during the designation of the zone. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 3.  Minnesota Statutes 2002, 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 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) income as provided under section 290.0802; 
           (5) to the extent included in federal adjusted gross 
        income, income realized on disposition of property exempt from 
        tax under section 290.491; 
           (6) 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); 
           (7) the exemption amount allowed under Laws 1995, chapter 
        255, article 3, section 2, subdivision 3; 
           (8) 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; 
           (9) 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; 
           (10) 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; 
           (11) 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; and 
           (12) in each of the five tax years immediately following 
        the tax year in which an addition is required under subdivision 
        19a, clause (7), an amount equal to one-fifth of the delayed 
        depreciation.  For purposes of this clause, "delayed 
        depreciation" means the amount of the addition made by the 
        taxpayer under subdivision 19a, clause (7), minus the positive 
        value of any net operating loss under section 172 of the 
        Internal Revenue Code generated for the tax year of the 
        addition.  The resulting delayed depreciation cannot be less 
        than zero; and 
           (13) job opportunity building zone income as provided under 
        section 469.316. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 4.  Minnesota Statutes 2002, section 290.01, 
        subdivision 29, is amended to read: 
           Subd. 29.  [TAXABLE INCOME.] The term "taxable income" 
        means:  
           (1) for individuals, estates, and trusts, the same as 
        taxable net income; 
           (2) for corporations, 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 exemption for operating in a job opportunity 
        building zone under section 469.317. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 5.  Minnesota Statutes 2002, 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 subtraction under section 290.01, subdivision 
        19b, clause (13), and 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 
        clauses (1) and (13). 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 6.  Minnesota Statutes 2002, section 290.06, is 
        amended by adding a subdivision to read: 
           Subd. 29.  [JOB OPPORTUNITY BUILDING ZONE JOB CREDIT.] A 
        taxpayer that is a qualified business, as defined in section 
        469.310, subdivision 11, is allowed a credit as determined under 
        section 469.318 against the tax imposed by this chapter. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 7.  Minnesota Statutes 2002, section 290.067, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
        as a credit against the tax due from the taxpayer and a spouse, 
        if any, under this chapter an amount equal to the dependent care 
        credit for which the taxpayer is eligible pursuant to the 
        provisions of section 21 of the Internal Revenue Code subject to 
        the limitations provided in subdivision 2 except that in 
        determining whether the child qualified as a dependent, income 
        received as a Minnesota family investment program grant or 
        allowance to or on behalf of the child must not be taken into 
        account in determining whether the child received more than half 
        of the child's support from the taxpayer, and the provisions of 
        section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
           (b) If a child who has not attained the age of six years at 
        the close of the taxable year is cared for at a licensed family 
        day care home operated by the child's parent, the taxpayer is 
        deemed to have paid employment-related expenses.  If the child 
        is 16 months old or younger at the close of the taxable year, 
        the amount of expenses deemed to have been paid equals the 
        maximum limit for one qualified individual under section 21(c) 
        and (d) of the Internal Revenue Code.  If the child is older 
        than 16 months of age but has not attained the age of six years 
        at the close of the taxable year, the amount of expenses deemed 
        to have been paid equals the amount the licensee would charge 
        for the care of a child of the same age for the same number of 
        hours of care.  
           (c) If a married couple: 
           (1) has a child who has not attained the age of one year at 
        the close of the taxable year; 
           (2) files a joint tax return for the taxable year; and 
           (3) does not participate in a dependent care assistance 
        program as defined in section 129 of the Internal Revenue Code, 
        in lieu of the actual employment related expenses paid for that 
        child under paragraph (a) or the deemed amount under paragraph 
        (b), the lesser of (i) the combined earned income of the couple 
        or (ii) the amount of the maximum limit for one qualified 
        individual under section 21(c) and (d) of the Internal Revenue 
        Code will be deemed to be the employment related expense paid 
        for that child.  The earned income limitation of section 21(d) 
        of the Internal Revenue Code shall not apply to this deemed 
        amount.  These deemed amounts apply regardless of whether any 
        employment-related expenses have been paid.  
           (d) If the taxpayer is not required and does not file a 
        federal individual income tax return for the tax year, no credit 
        is allowed for any amount paid to any person unless: 
           (1) the name, address, and taxpayer identification number 
        of the person are included on the return claiming the credit; or 
           (2) if the person is an organization described in section 
        501(c)(3) of the Internal Revenue Code and exempt from tax under 
        section 501(a) of the Internal Revenue Code, the name and 
        address of the person are included on the return claiming the 
        credit.  
        In the case of a failure to provide the information required 
        under the preceding sentence, the preceding sentence does not 
        apply if it is shown that the taxpayer exercised due diligence 
        in attempting to provide the information required. 
           In the case of a nonresident, part-year resident, or a 
        person who has earned income not subject to tax under this 
        chapter including earned income excluded pursuant to section 
        290.01, subdivision 19b, clause (13), the credit determined 
        under section 21 of the Internal Revenue Code must be allocated 
        based on the ratio by which the earned income of the claimant 
        and the claimant's spouse from Minnesota sources bears to the 
        total earned income of the claimant and the claimant's spouse. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 8.  Minnesota Statutes 2002, 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 $4,620 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 
        $5,770, 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 $6,920 of earned income and 8.5 
        percent of earned income over $12,080 but less than $13,450.  
        The credit is reduced by 5.73 percent of earned income or 
        modified adjusted gross income, whichever is greater, in excess 
        of $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 $9,720 of earned 
        income and 20 percent of earned income over $14,860 but less 
        than $16,800.  The credit is reduced by 10.3 percent of earned 
        income or modified adjusted gross income, whichever is greater, 
        in excess of $17,890, 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 including income excluded under section 290.01, 
        subdivision 19b, clause (13), 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 taxable 
        years beginning after December 31, 2003. 
           Sec. 9.  Minnesota Statutes 2002, 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 charitable contribution deduction under section 170 
        of the Internal Revenue Code to the extent that the deduction 
        exceeds 1.3 percent of adjusted gross income, as defined in 
        section 62 of the Internal Revenue Code; 
           (ii) the medical expense deduction; 
           (iii) the casualty, theft, and disaster loss deduction; and 
           (iv) the impairment-related work expenses of a disabled 
        person; 
           (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); 
           (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); and 
           (6) the amount of addition required by section 290.01, 
        subdivision 19a, clause (7); 
           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, clause clauses (12) 
        and (13). 
           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. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 10.  Minnesota Statutes 2002, 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 portion of the depreciation deduction allowed for 
        federal income tax purposes under section 168(k) of the Internal 
        Revenue Code that is required as an addition under section 
        290.01, subdivision 19c, clause (16), is disallowed in 
        determining alternative minimum taxable income. 
           (3) The subtraction for depreciation allowed under section 
        290.01, subdivision 19d, clause (19), is allowed as a 
        depreciation deduction in determining alternative minimum 
        taxable income. 
           (4) The alternative tax net operating loss deduction under 
        sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
        not apply. 
           (5) The special rule for certain dividends under section 
        56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 
           (6) The special rule for dividends from section 936 
        companies under section 56(g)(4)(C)(iii) does not apply. 
           (7) The tax preference for depletion under section 57(a)(1) 
        of the Internal Revenue Code does not apply. 
           (8) 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). 
           (9) The tax preference for tax exempt interest under 
        section 57(a)(5) of the Internal Revenue Code does not apply.  
           (10) The tax preference for charitable contributions of 
        appreciated property under section 57(a)(6) of the Internal 
        Revenue Code does not apply. 
           (11) 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, 2004. 
           (12) 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. 
           (13) 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). 
           (14) Alternative minimum taxable income excludes the income 
        from operating in a job opportunity building zone as provided 
        under section 469.317. 
           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 for taxable 
        years beginning after December 31, 2003. 
           Sec. 11.  Minnesota Statutes 2002, 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; 
           (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; 
        and 
           (7) an entity, if for the taxable year all of its property 
        is located in a job opportunity building zone designated under 
        section 469.314 and all of its payroll is a job opportunity 
        building zone payroll under section 469.310. 
           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, 2003. 
           Sec. 12.  Minnesota Statutes 2002, section 290.0922, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DEFINITIONS.] (a) "Minnesota sales or receipts" 
        means the total sales apportioned to Minnesota pursuant to 
        section 290.191, subdivision 5, the total receipts attributed to 
        Minnesota pursuant to section 290.191, subdivisions 6 to 8, 
        and/or the total sales or receipts apportioned or attributed to 
        Minnesota pursuant to any other apportionment formula applicable 
        to the taxpayer. 
           (b) "Minnesota property" means total Minnesota tangible 
        property as provided in section 290.191, subdivisions 9 to 11, 
        and any other tangible property located in Minnesota, but does 
        not include property located in a job opportunity building zone 
        designated under section 469.314.  Intangible property shall not 
        be included in Minnesota property for purposes of this section.  
        Taxpayers who do not utilize tangible property to apportion 
        income shall nevertheless include Minnesota property for 
        purposes of this section.  On a return for a short taxable year, 
        the amount of Minnesota property owned, as determined under 
        section 290.191, shall be included in Minnesota property based 
        on a fraction in which the numerator is the number of days in 
        the short taxable year and the denominator is 365.  
           (c) "Minnesota payrolls" means total Minnesota payrolls as 
        provided in section 290.191, subdivision 12, but does not 
        include job opportunity building zone payrolls under section 
        469.310, subdivision 8.  Taxpayers who do not utilize payrolls 
        to apportion income shall nevertheless include Minnesota 
        payrolls for purposes of this section. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 13.  Minnesota Statutes 2002, section 297A.68, is 
        amended by adding a subdivision to read: 
           Subd. 37.  [JOB OPPORTUNITY BUILDING ZONES.] (a) Purchases 
        of tangible personal property or taxable services by a qualified 
        business, as defined in section 469.310, are exempt if the 
        property or services are primarily used or consumed in a job 
        opportunity building zone designated under section 469.314. 
           (b) Purchase and use of construction materials and supplies 
        for construction of improvements to real property in a job 
        opportunity building zone are exempt if the improvements after 
        completion of construction are to be used in the conduct of a 
        qualified business, as defined in section 469.310.  This 
        exemption applies regardless of whether the purchases are made 
        by the business or a contractor. 
           (c) The exemptions under this subdivision apply to a local 
        sales and use tax regardless of whether the local sales tax is 
        imposed on the sales taxable as defined under this chapter. 
           (d) This subdivision applies to sales, if the purchase was 
        made and delivery received during the duration of the zone. 
           [EFFECTIVE DATE.] This section is effective for sales made 
        on or after the day following final enactment. 
           Sec. 14.  Minnesota Statutes 2002, 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.67, 
        subdivision 11; 
           (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.90; 
           (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; 
           (12) purchase of a motor vehicle for use by a transit 
        provider exclusively to provide transit service is exempt if the 
        transit provider is either (i) receiving financial assistance or 
        reimbursement under section 174.24 or 473.384, or (ii) operating 
        under section 174.29, 473.388, or 473.405; 
           (13) purchase or use of a motor vehicle by a qualified 
        business, as defined in section 469.310, located in a job 
        opportunity building zone, if the motor vehicle is principally 
        garaged in the job opportunity building zone and is primarily 
        used as part of or in direct support of the person's operations 
        carried on in the job opportunity building zone.  The exemption 
        under this clause applies to sales, if the purchase was made and 
        delivery received during the duration of the job opportunity 
        building zone.  The exemption under this clause also applies to 
        any local sales and use tax. 
           [EFFECTIVE DATE.] This section is effective for sales made 
        after December 31, 2003. 
           Sec. 15.  [469.310] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For purposes of sections 469.310 
        to 469.320, the following terms have the meanings given. 
           Subd. 2.  [AGRICULTURAL PROCESSING FACILITY.] "Agricultural 
        processing facility" means one or more facilities or operations 
        that transform, package, sort, or grade livestock or livestock 
        products, agricultural commodities, or plants or plant products 
        into goods that are used for intermediate or final consumption 
        including goods for nonfood use, and surrounding property. 
           Subd. 3.  [APPLICANT.] "Applicant" means a local government 
        unit or units applying for designation of an area as a job 
        opportunity building zone or a joint powers board, established 
        under section 471.59, acting on behalf of two or more local 
        government units. 
           Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of trade and economic development. 
           Subd. 5.  [DEVELOPMENT PLAN.] "Development plan" means a 
        plan meeting the requirements of section 469.311. 
           Subd. 6.  [JOB OPPORTUNITY BUILDING ZONE OR ZONE.] "Job 
        opportunity building zone" or "zone" means a zone designated by 
        the commissioner under section 469.314, and includes an 
        agricultural processing facility zone. 
           Subd. 7.  [JOB OPPORTUNITY BUILDING ZONE PERCENTAGE OR ZONE 
        PERCENTAGE.] "Job opportunity building zone percentage" or "zone 
        percentage" means the following fraction reduced to a percentage:
           (1) the numerator of the fraction is: 
           (i) the ratio of the taxpayer's property factor under 
        section 290.191 located in the zone for the taxable year over 
        the property factor numerator determined under section 290.191, 
        plus 
           (ii) the ratio of the taxpayer's job opportunity building 
        zone payroll factor under subdivision 8 over the payroll factor 
        numerator determined under section 290.191; and 
           (2) the denominator of the fraction is two. 
           When calculating the zone percentage for a business that is 
        part of a unitary business as defined under section 290.17, 
        subdivision 4, the denominator of the payroll and property 
        factors is the Minnesota payroll and property of the unitary 
        business as reported on the combined report under section 
        290.17, subdivision 4, paragraph (j). 
           Subd. 8.  [JOB OPPORTUNITY BUILDING ZONE PAYROLL 
        FACTOR.] "Job opportunity building zone payroll factor" or "job 
        opportunity building zone payroll" is that portion of the 
        payroll factor under section 290.191 that represents: 
           (1) wages or salaries paid to an individual for services 
        performed in a job opportunity building zone; or 
           (2) wages or salaries paid to individuals working from 
        offices within a job opportunity building zone if their 
        employment requires them to work outside the zone and the work 
        is incidental to the work performed by the individual within the 
        zone. 
           Subd. 9.  [LOCAL GOVERNMENT UNIT.] "Local government unit" 
        means a statutory or home rule charter city, county, town, iron 
        range resources and rehabilitation agency, regional development 
        commission, or a federally designated economic development 
        district. 
           Subd. 10.  [PERSON.] "Person" includes an individual, 
        corporation, partnership, limited liability company, 
        association, or any other entity. 
           Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
        means a person carrying on a trade or business at a place of 
        business located within a job opportunity building zone. 
           (b) A person that relocates a trade or business from 
        outside a job opportunity building zone into a zone is not a 
        qualified business, unless the business: 
           (1)(i) increases full-time employment in the first full 
        year of operation within the job opportunity building zone by at 
        least 20 percent measured relative to the operations that were 
        relocated and maintains the required level of employment for 
        each year the zone designation applies; or 
           (ii) makes a capital investment in the property located 
        within a zone equivalent to ten percent of the gross revenues of 
        operation that were relocated in the immediately preceding 
        taxable year; and 
           (2) enters a binding written agreement with the 
        commissioner that: 
           (i) pledges the business will meet the requirements of 
        clause (1); 
           (ii) provides for repayment of all tax benefits enumerated 
        under section 469.315 to the business under the procedures in 
        section 469.319, if the requirements of clause (1) are not met 
        for the taxable year or for taxes payable during the year in 
        which the requirements were not met; and 
           (iii) contains any other terms the commissioner determines 
        appropriate. 
           Subd. 12.  [RELOCATES.] (a) "Relocates" means that the 
        trade or business: 
           (1) ceases one or more operations or functions at another 
        location in Minnesota and begins performing substantially the 
        same operations or functions at a location in a job opportunity 
        building zone; or 
           (2) reduces employment at another location in Minnesota 
        during a period starting one year before and ending one year 
        after it begins operations in a job opportunity building zone 
        and its employees in the job opportunity building zone are 
        engaged in the same line of business as the employees at the 
        location where it reduced employment. 
           (b) "Relocate" does not include an expansion by a business 
        that establishes a new facility that does not replace or 
        supplant an existing operation or employment, in whole or in 
        part. 
           (c) "Trade or business" includes any business entity that 
        is substantially similar in operation or ownership to the 
        business entity seeking to be a qualified business under this 
        section. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 16.  [469.311] [DEVELOPMENT PLAN.] 
           (a) An applicant for designation of a job opportunity 
        building zone must adopt a written development plan for the zone 
        before submitting the application to the commissioner. 
           (b) The development plan must contain, at least, the 
        following: 
           (1) a map of the proposed zone that indicates the 
        geographic boundaries of the zone, the total area, and present 
        use and conditions generally of the land and structures within 
        those boundaries; 
           (2) evidence of community support and commitment from local 
        government, local workforce investment boards, school districts, 
        and other education institutions, business groups, and the 
        public; 
           (3) a description of the methods proposed to increase 
        economic opportunity and expansion, facilitate infrastructure 
        improvement, reduce the local regulatory burden, and identify 
        job-training opportunities; 
           (4) current social, economic, and demographic 
        characteristics of the proposed zone and anticipated 
        improvements in education, health, human services, and 
        employment if the zone is created; 
           (5) a description of anticipated activity in the zone and 
        each subzone, including, but not limited to, industrial use, 
        industrial site reuse, commercial or retail use, and residential 
        use; and 
           (6) any other information required by the commissioner. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 17.  [469.312] [JOB OPPORTUNITY BUILDING ZONES; 
        LIMITATIONS.] 
           Subdivision 1.  [MAXIMUM SIZE.] A job opportunity building 
        zone may not exceed 5,000 acres.  For a zone designated as an 
        agricultural processing facility zone, the zone also may not 
        exceed the size of a site necessary for the agricultural 
        processing facility, including ancillary operations and space 
        for expansion in the reasonably foreseeable future. 
           Subd. 2.  [SUBZONES.] The area of a job opportunity 
        building zone may consist of one or more noncontiguous areas or 
        subzones. 
           Subd. 3.  [OUTSIDE METROPOLITAN AREA.] The area of a job 
        opportunity building zone must be located outside of the 
        metropolitan area, as defined in section 473.121, subdivision 2. 
           Subd. 4.  [BORDER CITY DEVELOPMENT ZONES.] (a) The area of 
        a job opportunity building zone may not include the area of a 
        border city development zone designated under section 469.1731.  
        The city may remove property from a border city development zone 
        contingent upon the area being designated as a job opportunity 
        building zone.  Before removing a parcel of property from a 
        border city development zone, the city must obtain the written 
        consent to the removal from each recipient that is located on 
        the parcel and receives incentives under the border city 
        development zone.  Consent of any other property owner or 
        taxpayer in the border city development zone is not required. 
           (b) A city may not provide tax incentives under section 
        469.1734 to individuals or businesses for operations or activity 
        in a job opportunity building zone. 
           Subd. 5.  [DURATION LIMIT.] The maximum duration of a zone 
        is 12 years.  The applicant may request a shorter duration.  The 
        commissioner may specify a shorter duration, regardless of the 
        requested duration. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 18.  [469.313] [APPLICATION FOR DESIGNATION.] 
           Subdivision 1.  [WHO MAY APPLY.] One or more local 
        government units, or a joint powers board under section 471.59, 
        acting on behalf of two or more units, may apply for designation 
        of an area as a job opportunity building zone.  All or part of 
        the area proposed for designation as a zone must be located 
        within the boundaries of each of the governmental units.  A 
        local government unit may not submit or have submitted on its 
        behalf more than one application for designation of a job 
        opportunity building zone. 
           Subd. 2.  [APPLICATION CONTENT.] The application must 
        include: 
           (1) a development plan meeting the requirements of section 
        469.311; 
           (2) the proposed duration of the zone, not to exceed 12 
        years; 
           (3) a resolution or ordinance adopted by each of the cities 
        or towns and the counties in which the zone is located, agreeing 
        to provide all of the local tax exemptions provided under 
        section 469.315; 
           (4) if the proposed zone includes area in a border city 
        development zone, written consent to removal of the property 
        from the border city development zone to the extent required by 
        section 469.312, subdivision 4; 
           (5) an agreement by the applicant to treat incentives 
        provided under the zone designation as business subsidies under 
        sections 116J.993 to 116J.995 and to comply with the 
        requirements of that law; and 
           (6) supporting evidence to allow the commissioner to 
        evaluate the application under the criteria in section 469.314. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 19.  [469.314] [DESIGNATION OF JOB OPPORTUNITY 
        BUILDING ZONES.] 
           Subdivision 1.  [COMMISSIONER TO DESIGNATE.] (a) The 
        commissioner, in consultation with the commissioner of revenue, 
        shall designate not more than ten job opportunity building 
        zones.  In making the designations, the commissioner shall 
        consider need and likelihood of success to yield the most 
        economic development and revitalization of economically 
        distressed rural areas of Minnesota. 
           (b) In addition to the designations under paragraph (a), 
        the commissioner may, in consultation with the commissioners of 
        agriculture and revenue, designate up to five agricultural 
        processing facility zones. 
           (c) The commissioner may, upon designation of a zone, 
        modify the development plan, including the boundaries of the 
        zone or subzones, if in the commissioner's opinion a modified 
        plan would better meet the objectives of the job opportunity 
        building zone program.  The commissioner shall notify the 
        applicant of the modification and provide a statement of the 
        reasons for the modifications. 
           Subd. 2.  [NEED INDICATORS.] (a) In evaluating applications 
        to determine the need for designation of a job opportunity 
        building zone, the commissioner shall consider the following 
        factors as indicators of need: 
           (1) the percentage of the population that is below 200 
        percent of the poverty rate, compared with the state as a whole; 
           (2) the extent to which the area's average weekly wage is 
        significantly lower than the state average weekly wage; 
           (3) the amount of property in or near the proposed zone 
        that is deteriorated or underutilized; 
           (4) the extent to which the median sale price of housing 
        units in the area is below the state median; 
           (5) the extent to which the median household income of the 
        area is lower than the state median household income; 
           (6) the extent to which the area experienced a population 
        loss during the 20-year period ending the year before the 
        application is made; 
           (7) the extent to which an area has experienced sudden or 
        severe job loss as a result of closing of businesses or other 
        employers; 
           (8) the extent to which property in the area would remain 
        underdeveloped or nonperforming due to physical characteristics; 
           (9) the extent to which the area has substantial real 
        property with adequate infrastructure and energy to support new 
        or expanded development; and 
           (10) the extent to which the business startup or expansion 
        rates are significantly lower than the respective rate for the 
        state.  
           (b) In applying the need indicators, the best available 
        data should be used.  If reported data are not available for the 
        proposed zone, data for the smallest area that is available and 
        includes the area of the proposed zone may be used.  The 
        commissioner may require applicants to provide data to 
        demonstrate how the area meets one or more of the indicators of 
        need. 
           Subd. 3.  [SUCCESS INDICATORS.] In determining the 
        likelihood of success of a proposed zone, the commissioner shall 
        consider: 
           (1) the strength and viability of the proposed development 
        goals, objectives, and strategies in the development plan; 
           (2) whether the development plan is creative and innovative 
        in comparison to other applications; 
           (3) local public and private commitment to development of 
        the proposed zone and the potential cooperation of surrounding 
        communities; 
           (4) existing resources available to the proposed zone; 
           (5) how the designation of the zone would relate to other 
        economic and community development projects and to regional 
        initiatives or programs; 
           (6) how the regulatory burden will be eased for businesses 
        operating in the proposed zone; 
           (7) proposals to establish and link job creation and job 
        training; and 
           (8) the extent to which the development is directed at 
        encouraging and that designation of the zone is likely to result 
        in the creation of high-paying jobs. 
           Subd. 4.  [DESIGNATION SCHEDULE.] (a) The schedule in 
        paragraphs (b) to (f) applies to the designation of job 
        opportunity building zones. 
           (b) The commissioner shall publish the form for 
        applications and any procedural, form, or content requirements 
        for applications by no later than August 1, 2003.  The 
        commissioner may publish these requirements on the Internet, in 
        the State Register, or by any other means the commissioner 
        determines appropriate to disseminate the information to 
        potential applicants for designation. 
           (c) Applications must be submitted by October 15, 2003. 
           (d) The commissioner shall designate the zones by no later 
        than December 31, 2003. 
           (e) The designation of the zones takes effect January 1, 
        2004. 
           (f) The commissioner may reserve one or more of the ten 
        authorized zones for a second round of designations in calendar 
        year 2004.  If the commissioner chooses to reserve designations 
        for this purpose, the commissioner shall establish the schedule 
        for the second round of designations, notwithstanding the dates 
        in paragraphs (c), (d), and (e).  The commissioner shall allow a 
        period of at least 90 days for submission of applications after 
        notification of the second round.  A zone designated in the 
        second round takes effect on January 1, 2005. 
           Subd. 5.  [GEOGRAPHIC DISTRIBUTION.] The commissioner shall 
        have as a goal the geographic distribution of zones around the 
        state. 
           Subd. 6.  [RULEMAKING EXEMPTION.] The commissioner's 
        actions in establishing procedures, requirements, and making 
        determinations to administer sections 469.310 to 469.320 are not 
        a rule for purposes of chapter 14 and are not subject to the 
        Administrative Procedure Act contained in chapter 14 and are not 
        subject to section 14.386. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 20.  [469.315] [TAX INCENTIVES AVAILABLE IN ZONES.] 
           Qualified businesses that operate in a job opportunity 
        building zone, individuals who invest in a qualified business 
        that operates in a job opportunity building zone, and property 
        located in a job opportunity building zone qualify for: 
           (1) exemption from individual income taxes as provided 
        under section 469.316; 
           (2) exemption from corporate franchise taxes as provided 
        under section 469.317; 
           (3) exemption from the state sales and use tax and any 
        local sales and use taxes on qualifying purchases as provided in 
        section 297A.68, subdivision 37; 
           (4) exemption from the state sales tax on motor vehicles 
        and any local sales tax on motor vehicles as provided under 
        section 297B.03; 
           (5) exemption from the property tax as provided in section 
        272.02, subdivision 64; 
           (6) exemption from the wind energy production tax under 
        section 272.029, subdivision 7; and 
           (7) the jobs credit allowed under section 469.318. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 21.  [469.316] [INDIVIDUAL INCOME TAX EXEMPTION.] 
           Subdivision 1.  [APPLICATION.] An individual operating a 
        trade or business in a job opportunity building zone, and an 
        individual making a qualifying investment in a qualified 
        business operating in a job opportunity building zone qualifies 
        for the exemptions from taxes imposed under chapter 290, as 
        provided in this section.  The exemptions provided under this 
        section apply only to the extent that the income otherwise would 
        be taxable under chapter 290.  Subtractions under this section 
        from federal taxable income, alternative minimum taxable income, 
        or any other base subject to tax are limited to the amount that 
        otherwise would be included in the tax base absent the exemption 
        under this section.  This section applies only to taxable years 
        beginning during the duration of the job opportunity building 
        zone. 
           Subd. 2.  [RENTS.] An individual is exempt from the taxes 
        imposed under chapter 290 on net rents derived from real or 
        tangible personal property located in a zone for a taxable year 
        in which the zone was designated a job opportunity building 
        zone.  If tangible personal property was used both within and 
        outside of the zone, the exemption amount for the net rental 
        income must be multiplied by a fraction, the numerator of which 
        is the number of days the property was used in the zone and the 
        denominator of which is the total days. 
           Subd. 3.  [BUSINESS INCOME.] An individual is exempt from 
        the taxes imposed under chapter 290 on net income from the 
        operation of a qualified business in a job opportunity building 
        zone.  If the trade or business is carried on within and without 
        the zone and the individual is not a resident of Minnesota, the 
        exemption must be apportioned based on the zone percentage for 
        the taxable year.  If the trade or business is carried on within 
        and without the zone and the individual is a resident of 
        Minnesota, the exemption must be apportioned based on the zone 
        percentage for the taxable year, except the ratios under section 
        469.310, subdivision 7, clause (1), items (i) and (ii), must use 
        the denominators of the property and payroll factors determined 
        under section 290.191.  No subtraction is allowed under this 
        section in excess of 20 percent of the sum of the job 
        opportunity building zone payroll and the adjusted basis of the 
        property at the time that the property is first used in the job 
        opportunity building zone by the business. 
           Subd. 4.  [CAPITAL GAINS.] (a) An individual is exempt from 
        the taxes imposed under chapter 290 on: 
           (1) net gain derived on a sale or exchange of real property 
        located in the zone and used by a qualified business.  If the 
        property was held by the individual during a period when the 
        zone was not designated, the gain must be prorated based on the 
        percentage of time, measured in calendar days, that the real 
        property was held by the individual during the period the zone 
        designation was in effect to the total period of time the real 
        property was held by the individual; 
           (2) net gain derived on a sale or exchange of tangible 
        personal property used by a qualified business in the zone.  If 
        the property was held by the individual during a period when the 
        zone was not designated, the gain must be prorated based on the 
        percentage of time, measured in calendar days, that the property 
        was held by the individual during the period the zone 
        designation was in effect to the total period of time the 
        property was held by the individual.  If the tangible personal 
        property was used outside of the zone during the period of the 
        zone's designation, the exemption must be multiplied by a 
        fraction, the numerator of which is the number of days the 
        property was used in the zone during the time of the designation 
        and the denominator of which is the total days the property was 
        held during the time of the designation; and 
           (3) net gain derived on a sale of an ownership interest in 
        a qualified business operating in the job opportunity building 
        zone, meeting the requirements of paragraph (b).  The exemption 
        on the gain must be multiplied by the zone percentage of the 
        business for the taxable year prior to the sale. 
           (b) A qualified business meets the requirements of 
        paragraph (a), clause (3), if it is a corporation, an S 
        corporation, or a partnership, and for the taxable year its job 
        opportunity building zone percentage exceeds 25 percent.  For 
        purposes of paragraph (a), clause (3), the zone percentage must 
        be calculated by modifying the ratios under section 469.310, 
        subdivision 7, clause (1), items (i) and (ii), to use the 
        denominators of the property and payroll factors determined 
        under section 290.191.  Upon the request of an individual 
        holding an ownership interest in the entity, the entity must 
        certify to the owner, in writing, the job opportunity building 
        zone percentage needed to determine the exemption. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 22.  [469.317] [CORPORATE FRANCHISE TAX EXEMPTION.] 
           (a) A qualified business is exempt from taxation under 
        section 290.02, the alternative minimum tax under section 
        290.0921, and the minimum fee under section 290.0922, on the 
        portion of its income attributable to operations within the 
        zone.  This exemption is determined as follows: 
           (1) for purposes of the tax imposed under section 290.02, 
        by multiplying its taxable net income by its zone percentage and 
        subtracting the result in determining taxable income; 
           (2) for purposes of the alternative minimum tax under 
        section 290.0921, by multiplying its alternative minimum taxable 
        income by its zone percentage and reducing alternative minimum 
        taxable income by this amount; and 
           (3) for purposes of the minimum fee under section 290.0922, 
        by excluding property and payroll in the zone from the 
        computations of the fee or by exempting the entity under section 
        290.0922, subdivision 2, clause (7). 
           (b) No subtraction is allowed under this section in excess 
        of 20 percent of the sum of the corporation's job opportunity 
        building zone payroll and the adjusted basis of the property at 
        the time that the property is first used in the job opportunity 
        building zone by the corporation. 
           (c) This section applies only to taxable years beginning 
        during the duration of the job opportunity building zone. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 23.  [469.318] [JOBS CREDIT.] 
           Subdivision 1.  [CREDIT ALLOWED.] A qualified business is 
        allowed a credit against the taxes imposed under chapter 290.  
        The credit equals seven percent of the: 
           (1) lesser of: 
           (i) zone payroll for the taxable year, less the zone 
        payroll for the base year; or 
           (ii) total Minnesota payroll for the taxable year, less 
        total Minnesota payroll for the base year; minus 
           (2) $30,000 multiplied by (the number of full-time 
        equivalent employees that the qualified business employs in the 
        job opportunity building zone for the taxable year, minus the 
        number of full-time equivalent employees the business employed 
        in the zone in the base year, but not less than zero). 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given. 
           (b) "Base year" means the taxable year beginning during the 
        calendar year prior to the calendar year in which the zone 
        designation took effect. 
           (c) "Full-time equivalent employees" means the equivalent 
        of annualized expected hours of work equal to 2,080 hours. 
           (d) "Minnesota payroll" means the wages or salaries 
        attributed to Minnesota under section 290.191, subdivision 12, 
        for the qualified business or the unitary business of which the 
        qualified business is a part, whichever is greater. 
           (e) "Zone payroll" means wages or salaries used to 
        determine the zone payroll factor for the qualified business, 
        less the amount of compensation attributable to any employee 
        that exceeds $100,000. 
           Subd. 3.  [INFLATION ADJUSTMENT.] For taxable years 
        beginning after December 31, 2004, the dollar amounts in 
        subdivision 1, clause (2), and subdivision 2, paragraph (e), are 
        annually adjusted for inflation.  The commissioner of revenue 
        shall adjust the amounts by the percentage determined under 
        section 290.06, subdivision 2d, for the taxable year. 
           Subd. 4.  [REFUNDABLE.] If the amount of the credit exceeds 
        the liability for tax under chapter 290, the commissioner of 
        revenue shall refund the excess to the qualified business. 
           Subd. 5.  [APPROPRIATION.] An amount sufficient to pay the 
        refunds authorized by this section is appropriated to the 
        commissioner of revenue from the general fund. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 24.  [469.319] [REPAYMENT OF TAX BENEFITS.] 
           Subdivision 1.  [REPAYMENT OBLIGATION.] A business must 
        repay the amount of the total tax reduction listed in section 
        469.315 and any refund under section 469.318 in excess of tax 
        liability, received during the two years immediately before it 
        ceased to operate in the zone, if the business: 
           (1) received tax reductions authorized by section 469.315; 
        and 
           (2)(i) did not meet the goals specified in an agreement 
        entered into with the applicant that states any obligation the 
        qualified business must fulfill in order to be eligible for tax 
        benefits.  The commissioner may extend for up to one year the 
        period for meeting any goals provided in an agreement.  The 
        applicant may extend the period for meeting other goals by 
        documenting in writing the reason for the extension and 
        attaching a copy of the document to its next annual report to 
        the commissioner; or 
           (ii) ceased to operate its facility located within the job 
        opportunity building zone or otherwise ceases to be or is not a 
        qualified business. 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given. 
           (b) "Business" means any person who received tax benefits 
        enumerated in section 469.315. 
           (c) "Commissioner" means the commissioner of revenue. 
           Subd. 3.  [DISPOSITION OR REPAYMENT.] The repayment must be 
        paid to the state to the extent it represents a state tax 
        reduction and to the county to the extent it represents a 
        property tax reduction.  Any amount repaid to the state must be 
        deposited in the general fund.  Any amount repaid to the county 
        for the property tax exemption must be distributed to the local 
        governments with authority to levy taxes in the zone in the same 
        manner provided for distribution of payment of delinquent 
        property taxes.  Any repayment of local sales taxes must be 
        repaid to the city or county imposing the local sales tax. 
           Subd. 4.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
        taxes imposed under chapter 290 or 297A or local taxes collected 
        pursuant to section 297A.99, a business must file an amended 
        return with the commissioner of revenue and pay any taxes 
        required to be repaid within 30 days after ceasing to do 
        business in the zone.  The amount required to be repaid is 
        determined by calculating the tax for the period or periods for 
        which repayment is required without regard to the exemptions and 
        credits allowed under section 469.315. 
           (b) For the repayment of taxes imposed under chapter 297B, 
        a business must pay any taxes required to be repaid to the motor 
        vehicle registrar, as agent for the commissioner of revenue, 
        within 30 days after ceasing to do business in the zone. 
           (c) For the repayment of property taxes, the county auditor 
        shall prepare a tax statement for the business, applying the 
        applicable tax extension rates for each payable year and provide 
        a copy to the business.  The business must pay the taxes to the 
        county treasurer within 30 days after receipt of the tax 
        statement.  The taxpayer may appeal the valuation and 
        determination of the property tax to the tax court within 30 
        days after receipt of the tax statement. 
           (d) The provisions of chapters 270 and 289A relating to the 
        commissioner's authority to audit, assess, and collect the tax 
        and to hear appeals are applicable to the repayment required 
        under paragraphs (a) and (b).  The commissioner may impose civil 
        penalties as provided in chapter 289A, and the additional tax 
        and penalties are subject to interest at the rate provided in 
        section 270.75, from 30 days after ceasing to do business in the 
        job opportunity building zone until the date the tax is paid. 
           (e) If a property tax is not repaid under paragraph (c), 
        the county treasurer shall add the amount required to be repaid 
        to the property taxes assessed against the property for payment 
        in the year following the year in which the treasurer discovers 
        that the business ceased to operate in the job opportunity 
        building zone. 
           (f) For determining the tax required to be repaid, a tax 
        reduction is deemed to have been received on the date that the 
        tax would have been due if the taxpayer had not been entitled to 
        the exemption or on the date a refund was issued for a 
        refundable tax credit. 
           (g) The commissioner may assess the repayment of taxes 
        under paragraph (d) any time within two years after the business 
        ceases to operate in the job opportunity building zone, or 
        within any period of limitations for the assessment of tax under 
        section 289A.38, whichever period is later. 
           Subd. 5.  [WAIVER AUTHORITY.] The commissioner may waive 
        all or part of a repayment, if the commissioner, in consultation 
        with the commissioner of trade and economic development and 
        appropriate officials from the local government units in which 
        the qualified business is located, determines that requiring 
        repayment of the tax is not in the best interest of the state or 
        the local government units and the business ceased operating as 
        a result of circumstances beyond its control including, but not 
        limited to: 
           (1) a natural disaster; 
           (2) unforeseen industry trends; or 
           (3) loss of a major supplier or customer. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 25.  [469.320] [ZONE PERFORMANCE; REMEDIES.] 
           Subdivision 1.  [REPORTING REQUIREMENT.] An applicant 
        receiving designation of a job opportunity building zone under 
        section 469.314 must annually report to the commissioner on its 
        progress in meeting the zone performance goals under the 
        development plan for the zone and the applicant's compliance 
        with the business subsidy law under sections 116J.993 to 
        116J.995. 
           Subd. 2.  [PROCEDURES.] For reports required by subdivision 
        1, the commissioner may prescribe: 
           (1) the required time or times by which the reports must be 
        filed; 
           (2) the form of the report; and 
           (3) the information required to be included in the report. 
           Subd. 3.  [REMEDIES.] If the commissioner determines, based 
        on a report filed under subdivision 1 or other available 
        information, that a zone or subzone is failing to meet its 
        performance goals, the commissioner may take any actions the 
        commissioner determines appropriate, including modification of 
        the boundaries of the zone or a subzone or termination of the 
        zone or a subzone.  Before taking any action, the commissioner 
        shall consult with the applicant and the affected local 
        government units, including notifying them of the proposed 
        actions to be taken.  The commissioner shall publish any order 
        modifying a zone in the State Register and on the Internet.  The 
        applicant may appeal the commissioner's order under the 
        contested case procedures of chapter 14. 
           Subd. 4.  [EXISTING BUSINESSES.] (a) An action to remove 
        area from a zone or to terminate a zone under this section does 
        not apply to: 
           (1) the property tax on improvements constructed before the 
        first January 2 following publication of the commissioner's 
        order; 
           (2) sales tax on purchases made before the first day of the 
        next calendar month beginning at least 30 days after publication 
        of the commissioner's order; and 
           (3) individual income tax or corporate franchise tax 
        attributable to a facility that was in operation before the 
        publication of the commissioner's order. 
           (b) The tax exemptions specified in paragraph (a) terminate 
        on the date on which the zone expires under the original 
        designation. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 26.  [477A.08] [JOB OPPORTUNITY BUILDING ZONE AID.] 
           Subdivision 1.  [ELIGIBILITY.] (a) For each assessment year 
        that the exemption for job opportunity building zone property is 
        in effect under section 272.02, subdivision 64, the assessor 
        shall determine the difference between the actual net tax 
        capacity and the net tax capacity that would be determined for 
        the job opportunity building zone, including any property 
        removed from the zone that continues to qualify under section 
        469.320, subdivision 4, if the exemption were not in effect. 
           (b) Each city and county is eligible for aid equal to 
        one-half of: 
           (1) the amount by which the sum of the differences 
        determined in paragraph (a) for the corresponding assessment 
        year exceeds three percent of the city's or county's total 
        taxable net tax capacity for taxes payable in 2003, multiplied 
        by 
           (2) the city's or the county's, as applicable, average 
        local tax rate for taxes payable in 2003. 
           Subd. 2.  [CERTIFICATION.] The county assessor shall notify 
        the commissioner of revenue of the amount determined under 
        subdivision 1, paragraph (b), clause (1), for any city or county 
        that qualifies for aid under this section by June 30 of the 
        assessment year, in a form prescribed by the commissioner.  The 
        commissioner shall notify each city and county of its qualifying 
        aid amount by August 15 of the assessment year. 
           Subd. 3.  [APPROPRIATION; PAYMENT.] The commissioner shall 
        pay each city and county its qualifying aid amount by July 20 of 
        the following year.  An amount sufficient to pay the aid under 
        this section is appropriated to the commissioner of revenue from 
        the general fund. 
           [EFFECTIVE DATE.] This section is effective beginning for 
        aid based on property taxes assessed in 2004, payable in 2005. 
           Sec. 27.  [APPROPRIATION; COST OF ADMINISTRATION.] 
           $100,000 in fiscal year 2004 and $30,000 in fiscal year 
        2005 are appropriated to the commissioner of trade and economic 
        development for the cost of designating job opportunity building 
        zones. 
           $53,000 in fiscal year 2004 and $29,000 in fiscal year 2005 
        are appropriated to the commissioner of revenue for the cost of 
        administering the tax provisions of this act. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 

                                   ARTICLE 2 
                     BIOTECHNOLOGY AND HEALTH SCIENCE ZONES 
           Section 1.  [LEGISLATIVE FINDINGS.] 
           The legislature finds, as a matter of public policy, that 
        biotechnology and the health sciences hold immense promise in 
        improving the quality of our lives, including curing diseases, 
        making our foods safer and more abundant, reducing our 
        dependence on fossil fuels and foreign oil, making better use of 
        Minnesota agriculture products, and growing tens of thousands of 
        new, high-paying jobs. 
           The legislature further finds that there are hundreds of 
        discoveries made each year at the University of Minnesota, the 
        Mayo Clinic, and other research institutions that, if properly 
        commercialized, could help provide these benefits.  
           The legislature further finds that biotechnology and health 
        sciences companies benefit from location in proximity to these 
        research institutions and the many faculty, students, and other 
        intellectual and physical infrastructure these institutions 
        provide.  
           The legislature further finds that Minnesota's high-quality 
        workforce is attractive to biotechnology and health sciences 
        companies that would want to relocate, start up, or expand in 
        Minnesota. 
           The legislature further finds and declares that it is 
        appropriate and necessary, to improve our quality of life and as 
        a matter of economic development, that Minnesota take rapid and 
        affirmative steps to encourage the development of biotechnology 
        and the health sciences and the commercialization of important 
        discoveries, especially through expansion of business 
        opportunities in proximity to the research institutions where 
        those discoveries occur.  This must include attention to the 
        ethical, legal, and societal impacts of the industry, including 
        risk assessment and environmental protection. 
           Sec. 2.  Minnesota Statutes 2002, section 272.02, is 
        amended by adding a subdivision to read: 
           Subd. 65.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
        PROPERTY.] (a) Improvements to real property, and personal 
        property, classified under section 273.13, subdivision 24, and 
        located within a biotechnology and health sciences industry zone 
        are exempt from ad valorem taxes levied under chapter 275, as 
        provided in this subdivision. 
           (b) For property to qualify for exemption under paragraph 
        (a), the occupant must be a qualified business, as defined in 
        section 469.330. 
           (c) The exemption applies beginning for the first 
        assessment year after designation of the biotechnology and 
        health sciences industry zone by the commissioner of trade and 
        economic development.  The exemption applies to each assessment 
        year that begins during the duration of the biotechnology and 
        health sciences industry zone.  This exemption does not apply to:
           (1) a levy under section 475.61 or similar levy provisions 
        under any other law to pay general obligation bonds; or 
           (2) a levy under section 126C.17, if the levy was approved 
        by the voters before the designation of the biotechnology and 
        health sciences industry zone. 
           (d) The exemption does not apply to taxes imposed by a 
        city, town, or county, unless the governing body adopts a 
        resolution granting the exemption.  A city, town, or county may 
        provide a complete property tax exemption, partial property tax 
        exemption, or no property tax exemption to qualified businesses 
        in the biotechnology and health sciences industry zone.  "City" 
        includes a statutory or home rule charter city. 
           (e) For property located in a tax increment financing 
        district, the county shall not adjust the original net tax 
        capacity of the district under section 469.177, subdivision 1, 
        paragraph (a), upon the expiration of an exemption under this 
        subdivision. 
           [EFFECTIVE DATE.] This section is effective beginning for 
        property taxes assessed in 2004, payable in 2005. 
           Sec. 3.  Minnesota Statutes 2002, section 290.01, 
        subdivision 29, is amended to read: 
           Subd. 29.  [TAXABLE INCOME.] The term "taxable income" 
        means:  
           (1) for individuals, estates, and trusts, the same as 
        taxable net income; 
           (2) for corporations, 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 exemption for operating in a biotechnology and 
        health sciences industry zone under section 469.337. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 4.  Minnesota Statutes 2002, section 290.06, is 
        amended by adding a subdivision to read: 
           Subd. 30.  [BIOTECHNOLOGY AND HEALTH SCIENCE INDUSTRY ZONE 
        JOB CREDIT.] A taxpayer that is a qualified business, as defined 
        in section 469.330, subdivision 11, is allowed a credit as 
        determined under section 469.338 against the franchise tax 
        imposed under section 290.06, subdivision 1, or the alternative 
        minimum tax imposed under section 290.0921. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003.  
           Sec. 5.  Minnesota Statutes 2002, section 290.06, is 
        amended by adding a subdivision to read: 
           Subd. 31.  [BIOTECHNOLOGY AND HEALTH SCIENCE INDUSTRY ZONE 
        RESEARCH AND DEVELOPMENT CREDIT.] A taxpayer that is a qualified 
        business, as defined in section 469.330, subdivision 11, is 
        allowed a credit as determined under section 469.339 against the 
        franchise tax imposed under section 290.06, subdivision 1, or 
        the alternative minimum tax imposed under section 290.0921. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 6.  Minnesota Statutes 2002, 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 portion of the depreciation deduction allowed for 
        federal income tax purposes under section 168(k) of the Internal 
        Revenue Code that is required as an addition under section 
        290.01, subdivision 19c, clause (16), is disallowed in 
        determining alternative minimum taxable income. 
           (3) The subtraction for depreciation allowed under section 
        290.01, subdivision 19d, clause (19), is allowed as a 
        depreciation deduction in determining alternative minimum 
        taxable income. 
           (4) The alternative tax net operating loss deduction under 
        sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
        not apply. 
           (5) The special rule for certain dividends under section 
        56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 
           (6) The special rule for dividends from section 936 
        companies under section 56(g)(4)(C)(iii) does not apply. 
           (7) The tax preference for depletion under section 57(a)(1) 
        of the Internal Revenue Code does not apply. 
           (8) 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). 
           (9) The tax preference for tax exempt interest under 
        section 57(a)(5) of the Internal Revenue Code does not apply.  
           (10) The tax preference for charitable contributions of 
        appreciated property under section 57(a)(6) of the Internal 
        Revenue Code does not apply. 
           (11) 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, 2004. 
           (12) 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. 
           (13) 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). 
           (14) Alternative minimum taxable income excludes the income 
        from operating in a biotechnology and health sciences industry 
        zone as provided under section 469.337. 
           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 for taxable 
        years beginning after December 31, 2003. 
           Sec. 7.  Minnesota Statutes 2002, section 290.0922, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DEFINITIONS.] (a) "Minnesota sales or receipts" 
        means the total sales apportioned to Minnesota pursuant to 
        section 290.191, subdivision 5, the total receipts attributed to 
        Minnesota pursuant to section 290.191, subdivisions 6 to 8, 
        and/or the total sales or receipts apportioned or attributed to 
        Minnesota pursuant to any other apportionment formula applicable 
        to the taxpayer. 
           (b) "Minnesota property" means total Minnesota tangible 
        property as provided in section 290.191, subdivisions 9 to 11, 
        and any other tangible property located in Minnesota, but does 
        not include property of a qualified business located in a 
        biotechnology and health sciences zone designated under section 
        469.334.  Intangible property shall not be included in Minnesota 
        property for purposes of this section.  Taxpayers who do not 
        utilize tangible property to apportion income shall nevertheless 
        include Minnesota property for purposes of this section.  On a 
        return for a short taxable year, the amount of Minnesota 
        property owned, as determined under section 290.191, shall be 
        included in Minnesota property based on a fraction in which the 
        numerator is the number of days in the short taxable year and 
        the denominator is 365.  
           (c) "Minnesota payrolls"  means total Minnesota payrolls as 
        provided in section 290.191, subdivision 12, but does not 
        include biotechnology and health sciences zone payroll under 
        section 469.330, subdivision 8.  Taxpayers who do not utilize 
        payrolls to apportion income shall nevertheless include 
        Minnesota payrolls for purposes of this section. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 8.  Minnesota Statutes 2002, section 297A.68, is 
        amended by adding a subdivision to read: 
           Subd. 38.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 
        ZONE.] (a) Purchases of tangible personal property or taxable 
        services by a qualified business, as defined in section 469.330, 
        are exempt if the property or services are primarily used or 
        consumed in a biotechnology and health sciences industry zone 
        designated under section 469.334. 
           (b) Purchase and use of construction materials and supplies 
        for construction of improvements to real property in a 
        biotechnology and health sciences industry zone are exempt if 
        the improvements after completion of construction are to be used 
        in the conduct of a qualified business, as defined in section 
        469.330.  This exemption applies regardless of whether the 
        purchases are made by the business or a contractor. 
           (c) The exemptions under this subdivision apply to a local 
        sales and use tax regardless of whether the local sales tax is 
        imposed on the sales taxable as defined under this chapter. 
           (d)(1) The tax on sales of goods or services exempted under 
        this subdivision are imposed and collected as if the applicable 
        rate under section 297A.62 applied.  Upon application by the 
        purchaser, on forms prescribed by the commissioner, a refund 
        equal to the tax paid must be paid to the purchaser.  The 
        application must include sufficient information to permit the 
        commissioner to verify the sales tax paid and the eligibility of 
        the claimant to receive the credit.  No more than two 
        applications for refunds may be filed under this subdivision in 
        a calendar year.  The provisions of section 289A.40 apply to the 
        refunds payable under this subdivision. 
           (2) The amount required to make the refunds is annually 
        appropriated to the commissioner of revenue. 
           (3) The aggregate amount refunded to a qualified business 
        must not exceed the amount allocated to the qualified business 
        under section 469.335. 
           (e) This subdivision applies only to sales made during the 
        duration of the designation of the zone. 
           [EFFECTIVE DATE.] This section is effective for sales made 
        on or after the day following final enactment. 
           Sec. 9.  [469.330] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For purposes of sections 469.330 
        to 469.341, the following terms have the meanings given. 
           Subd. 2.  [APPLICANT.] "Applicant" means a local government 
        unit or units applying for designation of an area as a 
        biotechnology and health sciences industry zone or a joint 
        powers board, established under section 471.59, acting on behalf 
        of two or more local government units. 
           Subd. 3.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 
        FACILITY.] "Biotechnology and health sciences industry facility" 
        means one or more facilities or operations involved in: 
           (1) researching, developing, and/or manufacturing a 
        biotechnology product or service or a biotechnology-related 
        health sciences product or service; 
           (2) researching, developing, and/or manufacturing a 
        biotechnology medical device product or service or a 
        biotechnology-related medical device product or service; or 
           (3) promoting, supplying, or servicing a facility or 
        operation involved in clause (1) or (2), if the business derives 
        more than 50 percent of its gross receipts from those activities.
           Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of trade and economic development. 
           Subd. 5.  [DEVELOPMENT PLAN.] "Development plan" means a 
        plan meeting the requirements of section 469.331. 
           Subd. 6.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
        OR ZONE.] "Biotechnology and health sciences industry zone" or 
        "zone" means a zone designated by the commissioner under section 
        469.334. 
           Subd. 7.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
        PERCENTAGE OR ZONE PERCENTAGE.] "Biotechnology and health 
        sciences industry zone percentage" or "zone percentage" means 
        the following fraction reduced to a percentage: 
           (1) the numerator of the fraction is: 
           (i) the ratio of the taxpayer's property factor under 
        section 290.191 located in the zone for the taxable year over 
        the property factor numerator determined under section 290.191, 
        plus 
           (ii) the ratio of the taxpayer's biotechnology and health 
        sciences industry zone payroll factor under subdivision 8 over 
        the payroll factor numerator determined under section 290.191; 
        and 
           (2) the denominator of the fraction is two. 
           When calculating the zone percentage for a business that is 
        part of a unitary business as defined under section 290.17, 
        subdivision 4, the denominator of the payroll and property 
        factors is the Minnesota payroll and property of the unitary 
        business as reported on the combined report under section 
        290.17, subdivision 4, paragraph (j). 
           Subd. 8.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
        PAYROLL FACTOR.] "Biotechnology and health sciences industry 
        zone payroll factor" or "biotechnology and health sciences 
        industry zone payroll" is that portion of the payroll factor 
        under section 290.191 that represents: 
           (1) wages or salaries paid to an individual for services 
        performed for a qualified business in a biotechnology and health 
        sciences industry zone; or 
           (2) wages or salaries paid to individuals working from 
        offices of a qualified business within a biotechnology and 
        health sciences industry zone if their employment requires them 
        to work outside the zone and the work is incidental to the work 
        performed by the individual within the zone. 
           Subd. 9.  [LOCAL GOVERNMENT UNIT.] "Local government unit" 
        means a statutory or home rule charter city, county, town, or 
        school district. 
           Subd. 10.  [PERSON.] "Person" includes an individual, 
        corporation, partnership, limited liability company, 
        association, or any other entity. 
           Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
        means a person carrying on a trade or business at a 
        biotechnology and health sciences industry facility located 
        within a biotechnology and health sciences industry zone. 
           (b) A person that relocates a biotechnology and health 
        sciences industry facility from outside a biotechnology and 
        health sciences industry zone into a zone is not a qualified 
        business, unless the business: 
           (1)(i) increases full-time employment in the first full 
        year of operation within the biotechnology and health sciences 
        industry zone by at least 20 percent measured relative to the 
        operations that were relocated and maintains the required level 
        of employment for each year the zone designation applies; or 
           (ii) makes a capital investment in the property located 
        within a zone equivalent to ten percent of the gross revenues of 
        operation that were relocated in the immediately preceding 
        taxable year; and 
           (2) enters a binding written agreement with the 
        commissioner that: 
           (i) pledges the business will meet the requirements of 
        clause (1); 
           (ii) provides for repayment of all tax benefits enumerated 
        under section 469.336 to the business under the procedures in 
        section 469.340, if the requirements of clause (1) are not met; 
        and 
           (iii) contains any other terms the commissioner determines 
        appropriate. 
           Subd. 12.  [RELOCATES.] (a) "Relocates" means that the 
        trade or business: 
           (1) ceases one or more operations or functions at another 
        location in Minnesota and begins performing substantially the 
        same operations or functions at a location in a biotechnology 
        and health sciences industry zone; or 
           (2) reduces employment at another location in Minnesota 
        during a period starting one year before and ending one year 
        after it begins operations in a biotechnology and health 
        sciences industry zone and its employees in the biotechnology 
        and health sciences industry zone are engaged in the same line 
        of business as the employees at the location where it reduced 
        employment. 
           (b) "Relocate" does not include an expansion by a business 
        that establishes a new facility that does not replace or 
        supplant an existing operation or employment, in whole or in 
        part. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 10.  [469.331] [DEVELOPMENT PLAN.] 
           (a) An applicant for designation of a biotechnology and 
        health sciences industry zone must adopt a written development 
        plan for the zone before submitting the application to the 
        commissioner. 
           (b) The development plan must contain, at least, the 
        following: 
           (1) a map of the proposed zone that indicates the 
        geographic boundaries of the zone, the total area, and present 
        use and conditions generally of the land and structures within 
        those boundaries; 
           (2) evidence of community support and commitment from local 
        government, local workforce investment boards, school districts, 
        and other education institutions, business groups, and the 
        public; 
           (3) a description of the methods proposed to increase 
        economic opportunity and expansion, facilitate infrastructure 
        improvement, reduce the local regulatory burden, and identify 
        job-training opportunities; 
           (4) current social, economic, and demographic 
        characteristics of the proposed zone and anticipated 
        improvements in education, health, human services, and 
        employment if the zone is created; 
           (5) a description of anticipated activity in the zone and 
        each subzone, including, but not limited to, industrial use and 
        industrial site reuse; 
           (6) a description of the tax exemptions under section 
        469.336 to be provided to each qualifying business based on a 
        development agreement between the applicant and each qualified 
        business.  The development agreement must also state any 
        obligations the qualified business must fulfill in order to be 
        eligible for tax benefits; and 
           (7) any other information required by the commissioner. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 11.  [469.332] [BIOTECHNOLOGY AND HEALTH SCIENCES 
        INDUSTRY ZONE; LIMITATIONS.] 
           Subdivision 1.  [MAXIMUM SIZE.] A biotechnology and health 
        sciences industry zone may not exceed 5,000 acres.  
           Subd. 2.  [SUBZONES.] The area of a biotechnology and 
        health sciences industry zone may consist of one or more 
        noncontiguous areas or subzones. 
           Subd. 3.  [DURATION LIMIT.] The maximum duration of a zone 
        is 12 years.  The applicant may request a shorter duration.  The 
        commissioner may specify a shorter duration, regardless of the 
        requested duration. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 12.  [469.333] [APPLICATION FOR DESIGNATION.] 
           Subdivision 1.  [WHO MAY APPLY.] One or more local 
        government units, or a joint powers board under section 471.59, 
        acting on behalf of two or more units, may apply for designation 
        of an area as a biotechnology and health sciences industry 
        zone.  All or part of the area proposed for designation as a 
        zone must be located within the boundaries of each of the 
        governmental units.  A local government unit may not submit or 
        have submitted on its behalf more than one application for 
        designation of a biotechnology and health sciences industry zone.
           Subd. 2.  [APPLICATION CONTENT.] The application must 
        include: 
           (1) a development plan meeting the requirements of section 
        469.331; 
           (2) the proposed duration of the zone, not to exceed 12 
        years; 
           (3)(i) a resolution or ordinance adopted by each of the 
        cities or towns and the counties in which the zone is located, 
        agreeing to provide all of the local sales and use tax 
        exemptions provided under section 469.336; or (ii) a resolution 
        or ordinance adopted by each of the cities or towns and the 
        counties in which the zone is located that declares whether it 
        will provide property tax exemptions under section 469.336; 
           (4) an agreement by the applicant to treat incentives 
        provided under the zone designation as business subsidies under 
        sections 116J.993 to 116J.995 and to comply with the 
        requirements of that law; and 
           (5) supporting evidence to allow the commissioner to 
        evaluate the application under the criteria in section 469.334. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 13.  [469.334] [DESIGNATION OF BIOTECHNOLOGY AND 
        HEALTH SCIENCES INDUSTRY ZONE.] 
           Subdivision 1.  [COMMISSIONER TO DESIGNATE.] (a) The 
        commissioner, in consultation with the commissioner of revenue 
        and the director of the office of strategic and long-range 
        planning, shall designate not more than one biotechnology and 
        health sciences industry zone.  Priority must be given to 
        applicants with a development plan that links a higher 
        education/research institution with a biotechnology and health 
        sciences industry facility. 
           (b) The commissioner may consult with the applicant prior 
        to the designation of the zone.  The commissioner may modify the 
        development plan, including the boundaries of the zone or 
        subzones, if in the commissioner's opinion a modified plan would 
        better meet the objectives of the biotechnology and health 
        sciences industry zone program.  The commissioner shall notify 
        the applicant of the modifications and provide a statement of 
        the reasons for the modifications. 
           Subd. 2.  [NEED INDICATORS.] (a) In evaluating applications 
        to determine the need for designation of a biotechnology and 
        health sciences industry zone, the commissioner shall consider 
        the following factors as indicators of need: 
           (1) the extent to which land in proximity to a significant 
        scientific research institution could be developed as a higher 
        and better use for biotechnology and health sciences industry 
        facilities; 
           (2) the amount of property in or near the zone that is 
        deteriorated or underutilized; and 
           (3) the extent to which property in the area would remain 
        underdeveloped or nonperforming due to physical characteristics. 
           (b) The commissioner may require applicants to provide data 
        to demonstrate how the area meets one or more of the indicators 
        of need. 
           Subd. 3.  [SUCCESS INDICATORS.] In determining the 
        likelihood of success of a proposed zone, the commissioner shall 
        consider: 
           (1) applicants that show a viable link between a higher 
        education/research institution, the biotechnology and/or medical 
        devices business sectors, and one or more units of local 
        government with a development plan; 
           (2) the extent to which the area has substantial real 
        property with adequate infrastructure and energy to support new 
        or expanded development; 
           (3) the strength and viability of the proposed development 
        goals, objectives, and strategies in the development plan; 
           (4) whether the development plan is creative and innovative 
        in comparison to other applications; 
           (5) local public and private commitment to development of a 
        biotechnology and health sciences industry facility or 
        facilities in the proposed zone and the potential cooperation of 
        surrounding communities; 
           (6) existing resources available to the proposed zone; 
           (7) how the designation of the zone would relate to other 
        economic and community development projects and to regional 
        initiatives or programs; 
           (8) how the regulatory burden will be eased for 
        biotechnology and health sciences industry facilities located in 
        the proposed zone; 
           (9) proposals to establish and link job creation and job 
        training in the biotechnology and health sciences industry with 
        research/educational institutions; and 
           (10) the extent to which the development is directed at 
        encouraging, and that designation of the zone is likely to 
        result in, the creation of high-paying jobs. 
           Subd. 4.  [DESIGNATION SCHEDULE.] (a) The schedule in 
        paragraphs (b) to (e) applies to the designation of the 
        biotechnology and health sciences industry zone. 
           (b) The commissioner shall publish the form for 
        applications and any procedural, form, or content requirements 
        for applications by no later than August 1, 2003.  The 
        commissioner may publish these requirements on the Internet, in 
        the State Register, or by any other means the commissioner 
        determines appropriate to disseminate the information to 
        potential applicants for designation. 
           (c) Applications must be submitted by October 15, 2003. 
           (d) The commissioner shall designate the zones by no later 
        than December 31, 2003. 
           (e) The designation of the zones takes effect January 1, 
        2004. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 14.  [469.335] [APPLICATION FOR TAX BENEFITS.] 
           (a) To claim a tax credit or exemption against a state tax 
        under section 469.336, clauses (2) through (5), a business must 
        apply to the commissioner for a tax credit certificate.  As a 
        condition of its application, the business must agree to furnish 
        information to the commissioner that is sufficient to verify the 
        eligibility for any credits or exemptions claimed.  The total 
        amount of the state tax credits and exemptions allowed for the 
        specified period may not exceed the amount of the tax credit 
        certificates provided by the commissioner to the business.  The 
        commissioner must verify to the commissioner of revenue the 
        amount of tax exemptions or credits for which each business is 
        eligible. 
           (b) A tax credit certificate issued under this section may 
        specify the particular tax exemptions or credits against a state 
        tax that the qualified business is eligible to claim under 
        section 469.336, clauses (2) through (5), and the amount of each 
        exemption or credit allowed. 
           (c) The commissioner may issue $1,000,000 of tax credits or 
        exemptions in fiscal year 2004.  Any tax credits or exemptions 
        not awarded in fiscal year 2004 may be awarded in fiscal year 
        2005. 
           (d) A qualified business must use the tax credits or tax 
        exemptions granted under this section by the later of the end of 
        the state fiscal year or the taxpayer's tax year in which the 
        credits or exemptions are granted. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 15.  [469.336] [TAX INCENTIVES AVAILABLE IN ZONES.] 
           Qualified businesses that operate in a biotechnology and 
        health sciences industry zone, individuals who invest in a 
        qualified business that operates in a biotechnology and health 
        sciences industry zone, and property of a qualified business 
        located in a biotechnology and health sciences industry zone 
        qualify for: 
           (1) exemption from the property tax as provided in section 
        272.02, subdivision 65; 
           (2) exemption from corporate franchise taxes as provided 
        under section 469.337; 
           (3) exemption from the state sales and use tax and any 
        local sales and use taxes on qualifying purchases as provided in 
        section 297A.68, subdivision 37; 
           (4) research and development credits as provided under 
        section 469.339; 
           (5) jobs credits as provided under section 469.338. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 16.  [469.337] [CORPORATE FRANCHISE TAX EXEMPTION.] 
           (a) A qualified business is exempt from taxation under 
        section 290.02, the alternative minimum tax under section 
        290.0921, and the minimum fee under section 290.0922, on the 
        portion of its income attributable to operations of a qualified 
        business within the biotechnology and health sciences industry 
        zone.  This exemption is determined as follows: 
           (1) for purposes of the tax imposed under section 290.02, 
        by multiplying its taxable net income by its zone percentage and 
        subtracting the result in determining taxable income; 
           (2) for purposes of the alternative minimum tax under 
        section 290.0921, by multiplying its alternative minimum taxable 
        income by its zone percentage and reducing alternative minimum 
        taxable income by this amount; and 
           (3) for purposes of the minimum fee under section 290.0922, 
        by excluding property and payroll in the zone from the 
        computations of the fee. 
           (b) No subtraction is allowed under this section in excess 
        of 20 percent of the sum of the corporation's biotechnology and 
        health sciences industry zone payroll and the adjusted basis of 
        the property at the time that the property is first used in the 
        biotechnology and health sciences industry zone by the 
        corporation. 
           (c) No reduction in tax is allowed in excess of the amount 
        allocated under section 469.335. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2003. 
           Sec. 17.  [469.338] [JOBS CREDIT.] 
           Subdivision 1.  [CREDIT ALLOWED.] A qualified business is 
        allowed a credit against the taxes imposed under chapter 290. 
           The credit equals seven percent of the: 
           (1) lesser of: 
           (i) zone payroll for the taxable year, less the zone 
        payroll for the base year; or 
           (ii) total Minnesota payroll for the taxable year, less 
        total Minnesota payroll for the base year; minus 
           (2) $30,000 multiplied by the number of full-time 
        equivalent employee positions that the qualified business 
        employs in the biotechnology and health sciences industry zone 
        for the taxable year, minus the number of full-time equivalent 
        employees the business employed in the zone in the base year, 
        but not less than zero. 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meaning given. 
           (b) "Base year" means the taxable year beginning during the 
        calendar year in which the commissioner designated the zone. 
           (c) "Full-time equivalent employee position" means the 
        equivalent of annualized expected hours of work equal to 2,080 
        hours. 
           (d) "Minnesota payroll" means the wages or salaries 
        attributed to Minnesota under section 290.191, subdivision 12, 
        for the qualified business or the unitary business of which the 
        qualified business is a part, whichever is greater. 
           (e) "Zone payroll" means wages or salaries used to 
        determine the zone payroll factor for the qualified business. 
           Subd. 3.  [INFLATION ADJUSTMENT.] For taxable years 
        beginning after December 31, 2004, the dollar amount in 
        subdivision 1, clause (2), is annually adjusted for inflation.  
        The commissioner of revenue shall adjust the amount by the 
        percentage determined under section 290.06, subdivision 2d, for 
        the taxable year. 
           Subd. 4.  [REFUNDABLE.] If the amount of the credit 
        calculated under this section and allocated to the qualified 
        business under section 14 exceeds the liability for tax under 
        chapter 290, the commissioner of revenue shall refund the excess 
        to the qualified business. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 18.  [469.339] [CREDIT FOR INCREASING RESEARCH 
        ACTIVITIES IN A BIOTECHNOLOGY AND HEALTH SCIENCES ZONE.] 
           Subdivision 1.  [CREDIT ALLOWED.] A corporation, other than 
        a corporation treated as an "S" corporation under section 
        290.9725, is allowed a credit against the portion of the 
        franchise tax computed under section 290.06, subdivision 1, for 
        the taxable year equal to: 
           (1) five percent of the first $2,000,000 of the excess (if 
        any) of (i) the qualified research expenses for the taxable 
        year, over (ii) the base amount; and 
           (2) 2.5 percent of all such excess expenses over $2,000,000.
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given. 
           (b) "Qualified research expenses" means qualified research 
        expenses and basic research payments as defined in section 41(b) 
        and (e) of the Internal Revenue Code. 
           (c) "Qualified research" means activities in the fields of 
        biotechnology or health sciences that are "qualified research" 
        as defined in section 41(d) of the Internal Revenue Code, except 
        that the term does not include qualified research conducted 
        outside the biotechnology and health sciences industry zone. 
           (d) "Base amount" means base amount as defined in section 
        4(c) of the Internal Revenue Code, except that the average 
        annual gross receipts must be calculated using Minnesota sales 
        or receipts under section 290.191 and the definitions contained 
        in paragraphs (b) and (c) apply. 
           (e) "Liability for tax" for purposes of this section means 
        the tax imposed under this chapter for the taxable year reduced 
        by the sum of the nonrefundable credits allowed under this 
        chapter. 
           Subd. 3.  [REFUNDABLE CREDIT.] If the credit determined 
        under this section and allocated to the taxpayer under section 
        469.335 for the taxable year exceeds the taxpayer's liability 
        for tax for the year, the commissioner shall refund the 
        difference to the taxpayer. 
           Subd. 4.  [PARTNERSHIPS.] For partnerships, the credit is 
        allocated in the same manner provided by section 41(f)(2) of the 
        Internal Revenue Code. 
           Subd. 5.  [ADJUSTMENTS; ACQUISITIONS AND DISPOSITIONS.] If 
        a taxpayer acquires or disposes of the major portion of a trade 
        or business or the major portion of a separate unit of a trade 
        or business in a transaction with another taxpayer, the 
        taxpayer's qualified research expenses and base amount are 
        adjusted in the same manner provided by section 41(f)(3) of the 
        Internal Revenue Code. 
           Subd. 6.  [INTERACTION; REGULAR RESEARCH CREDIT.] Any 
        amount used to calculate a credit under this section may not be 
        used to generate a credit under section 290.068. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment.  
           Sec. 19.  [469.340] [REPAYMENT OF TAX BENEFITS.] 
           Subdivision 1.  [REPAYMENT OBLIGATION.] A business must 
        repay the amount of the tax reduction listed in section 469.336 
        and any refunds under sections 469.338 and 469.339 in excess of 
        tax liability, received during the two years immediately before 
        it ceased to operate in the zone, if the business: 
           (1) received tax reductions authorized by section 469.336; 
        and 
           (2)(i) did not meet the goals specified in an agreement 
        entered into with the applicant that states any obligation the 
        qualified business must fulfill in order to be eligible for tax 
        benefits.  The commissioner may extend for up to one year the 
        period for meeting any goals provided in an agreement.  The 
        applicant may extend the period for meeting other goals by 
        documenting in writing the reason for the extension and 
        attaching a copy of the document to its next annual report to 
        the commissioner; or 
           (ii) ceased to operate its facility located within the 
        biotechnology and health sciences industry zone or otherwise 
        ceases to be or is not a qualified business. 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given. 
           (b) "Business" means any person who received tax benefits 
        enumerated in section 469.336. 
           (c) "Commissioner" means the commissioner of revenue. 
           Subd. 3.  [DISPOSITION OR REPAYMENT.] The repayment must be 
        paid to the state to the extent it represents a state tax 
        reduction and to the county to the extent it represents a 
        property tax reduction.  Any amount repaid to the state must be 
        deposited in the general fund.  Any amount repaid to the county 
        for the property tax exemption must be distributed to the local 
        governments with authority to levy taxes in the zone in the same 
        manner provided for distribution of payment of delinquent 
        property taxes.  Any repayment of local sales taxes must be 
        repaid to the city or county imposing the local sales tax. 
           Subd. 4.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
        taxes imposed under chapter 290 or 297A or local taxes collected 
        pursuant to section 297A.99, a business must file an amended 
        return with the commissioner of revenue and pay any taxes 
        required to be repaid within 30 days after ceasing to do 
        business in the zone.  The amount required to be repaid is 
        determined by calculating the tax for the period or periods for 
        which repayment is required without regard to the exemptions and 
        credits allowed under section 469.336. 
           (b) For the repayment of property taxes, the county auditor 
        shall prepare a tax statement for the business, applying the 
        applicable tax extension rates for each payable year and provide 
        a copy to the business.  The business must pay the taxes to the 
        county treasurer within 30 days after receipt of the tax 
        statement.  The taxpayer may appeal the valuation and 
        determination of the property tax to the tax court within 30 
        days after receipt of the tax statement. 
           (c) The provisions of chapters 270 and 289A relating to the 
        commissioner's authority to audit, assess, and collect the tax 
        and to hear appeals are applicable to the repayment required 
        under paragraph (a).  The commissioner may impose civil 
        penalties as provided in chapter 289A, and the additional tax 
        and penalties are subject to interest at the rate provided in 
        section 270.75, from 30 days after ceasing to do business in the 
        biotechnology and health sciences industry zone until the date 
        the tax is paid. 
           (d) If a property tax is not repaid under paragraph (b), 
        the county treasurer shall add the amount required to be repaid 
        to the property taxes assessed against the property for payment 
        in the year following the year in which the treasurer discovers 
        that the business ceased to operate in the biotechnology and 
        health sciences industry zone. 
           (e) For determining the tax required to be repaid, a tax 
        reduction is deemed to have been received on the date that the 
        tax would have been due if the taxpayer had not been entitled to 
        the exemption, or on the date a refund was issued for a 
        refundable credit. 
           (f) The commissioner may assess the repayment of taxes 
        under paragraph (c) any time within two years after the business 
        ceases to operate in the biotechnology and health sciences 
        industry zone, or within any period of limitations for the 
        assessment of tax under section 289A.38, whichever period is 
        later. 
           Subd. 5.  [WAIVER AUTHORITY.] The commissioner may waive 
        all or part of a repayment, if the commissioner, in consultation 
        with the commissioner of trade and economic development and 
        appropriate officials from the local government units in which 
        the business is located, determines that requiring repayment of 
        the tax is not in the best interest of the state or the local 
        government units and the business ceased operating as a result 
        of circumstances beyond its control including, but not limited 
        to: 
           (1) a natural disaster; 
           (2) unforeseen industry trends; or 
           (3) loss of a major supplier or customer. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 20.  [469.341] [ZONE PERFORMANCE; REMEDIES.] 
           Subdivision 1.  [REPORTING REQUIREMENT.] An applicant 
        receiving designation of a biotechnology and health sciences 
        industry zone under section 469.334 must annually report to the 
        commissioner on its progress in meeting the zone performance 
        goals under the development plan for the zone and the 
        applicant's compliance with the business subsidy law under 
        sections 116J.993 to 116J.995. 
           Subd. 2.  [PROCEDURES.] For reports required by subdivision 
        1, the commissioner may prescribe: 
           (1) the required time or times by which the reports must be 
        filed; 
           (2) the form of the report; and 
           (3) the information required to be included in the report. 
           Subd. 3.  [REMEDIES.] If the commissioner determines, based 
        on a report filed under subdivision 1 or other available 
        information, that a zone or subzone is failing to meet its 
        performance goals, the commissioner may take any actions the 
        commissioner determines appropriate, including modification of 
        the boundaries of the zone or a subzone or termination of the 
        zone or a subzone.  Before taking any action, the commissioner 
        shall consult with the applicant and the affected local 
        government units, including notifying them of the proposed 
        actions to be taken.  The commissioner shall publish any order 
        modifying a zone in the State Register and on the Internet.  The 
        applicant may appeal the commissioner's order under the 
        contested case procedures of chapter 14. 
           Subd. 4.  [EXISTING BUSINESSES.] (a) An action to remove 
        area from a zone or to terminate a zone under this section does 
        not apply to: 
           (1) the property tax on improvements constructed before the 
        first January 2 following publication of the commissioner's 
        order; 
           (2) sales tax on purchases made before the first day of the 
        next calendar month beginning at least 30 days after publication 
        of the commissioner's order; and 
           (3) individual income tax or corporate franchise tax 
        attributable to a facility that was in operation before the 
        publication of the commissioner's order. 
           (b) The tax exemptions specified in paragraph (a) terminate 
        on the date on which the zone expires under the original 
        designation. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 

                                   ARTICLE 3
                                 FEDERAL UPDATE 
           Section 1.  Minnesota Statutes 2002, section 289A.02, 
        subdivision 7, as amended by Laws 2003, chapter 127, article 4, 
        section 1, 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, 2002 June 
        15, 2003. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment and is intended to adopt the 
        provisions of H.R. 2, the Jobs and Growth Tax Relief 
        Reconciliation Act of 2003, if it is enacted into law. 
           Sec. 2.  Minnesota Statutes 2002, section 290.01, 
        subdivision 19, as amended by Laws 2003, chapter 127, article 4, 
        section 2, 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, 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, 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, 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, and the 
        provision of section 412 of the Job Creation and Worker 
        Assistance Act of 2002, Public Law Number 107-147, 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, and 
        provisions of sections 101 and 402 of the Job Creation and 
        Worker Assistance Act of 2002, Public Law Number 107-147, 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, the 
        provisions of sections 104, 105, and 111 of the Victims of 
        Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 
        the provisions of sections 201, 403, 413, and 606 of the Job 
        Creation and Worker Assistance Act of 2002, Public Law Number 
        107-147, shall become effective at the same time it became 
        effective for federal purposes. 
           The Internal Revenue Code of 1986, as amended through March 
        15, 2002, shall be in effect for taxable years beginning after 
        December 31, 2001. 
           The provisions of sections 101 and 102 of the Victims of 
        Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 
        shall become effective at the same time it becomes effective for 
        federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 2002 June 15, 2003, shall be in effect for taxable 
        years beginning after December 31, 2002.  The provisions of 
        section 201 of the Jobs and Growth Tax Relief and Reconciliation 
        Act of 2003, H.R. 2, if it is enacted into law, are effective at 
        the same time it became effective for federal purposes. 
           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 and is intended to adopt the 
        provisions of H.R. 2, the Jobs and Growth Tax Relief 
        Reconciliation Act of 2003, if it is enacted into law. 
           Sec. 3.  Minnesota Statutes 2002, section 290.01, 
        subdivision 31, as amended by Laws 2003, chapter 127, article 4, 
        section 3, 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, 2002 June 
        15, 2003. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment and is intended to adopt the 
        provisions of H.R. 2, the Jobs and Growth Tax Relief 
        Reconciliation Act of 2003, if it is enacted into law. 
           Sec. 4.  Minnesota Statutes 2002, section 290A.03, 
        subdivision 15, as amended by Laws 2003, chapter 127, article 4, 
        section 4, is amended to read: 
           Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
        means the Internal Revenue Code of 1986, as amended 
        through December 31, 2002 June 15, 2003. 
           [EFFECTIVE DATE.] This section is effective for refunds 
        payable for rents paid in 2003 and thereafter and property taxes 
        payable in 2004 and thereafter and is intended to adopt the 
        provisions of H.R. 2, the Jobs and Growth Tax Relief 
        Reconciliation Act of 2003, if it is enacted into law. 
           Sec. 5.  [EFFECTIVE DATE.] 
           This article is effective only after the state makes a 
        certification to the Secretary of the Treasury of the United 
        States that satisfies the requirements of section 601(e) of the 
        Jobs and Growth Tax Relief and Reconciliation Act of 2003, H.R. 
        2.  The commissioner of finance shall certify to the 
        commissioner of revenue when the requirements of this section 
        have been met. 

                                   ARTICLE 4 
                                 PROPERTY TAXES 
           Section 1.  Minnesota Statutes 2002, section 272.02, 
        subdivision 25, is amended to read: 
           Subd. 25.  [ICE ARENAS; BASEBALL PARKS.] (a) Real and 
        personal property is exempt if it is owned and operated by a 
        private, nonprofit corporation exempt from federal income 
        taxation pursuant to United States Code, title 26, section 
        501(c)(3), primarily used for an ice arena or ice rink, and used 
        primarily for youth and high school programs. 
           (b) Real property is exempt if it is owned and operated by 
        a private, nonprofit corporation exempt from federal income 
        taxation pursuant to United States Code, title 26, section 
        501(c)(3), and primarily used as a baseball park by amateur 
        baseball players. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2003, payable in 2004, and thereafter. 
           Sec. 2.  Minnesota Statutes 2002, section 272.02, is 
        amended by adding a subdivision to read: 
           Subd. 66.  [ELDERLY LIVING FACILITY.] An elderly living 
        facility is exempt from taxation if it meets all of the 
        following requirements: 
           (1) the facility is located in a city of the first class 
        with a population of more than 350,000; 
           (2) the facility is owned and operated by a nonprofit 
        corporation organized under chapter 317A; 
           (3) the construction of the facility was commenced after 
        January 1, 2002, and before June 1, 2003; 
           (4) the facility consists of two buildings, which are 
        connected to a church that is exempt from taxation under 
        subdivision 6; 
           (5) the land for the facility was donated to the nonprofit 
        corporation by the church to which the facility is connected; 
           (6) the residents of the facility must be (i) at least 62 
        years of age or (ii) handicapped; 
           (7) the facility operates an on-site congregate dining 
        program in which participation by residents is mandatory, and 
        provides assisted living or similar social and physical support 
        services for residents; and 
           (8) at least 30 percent of the units in the facility are 
        occupied by persons whose annual income does not exceed 50 
        percent of median family income for the area. 
           The property is exempt under this subdivision for taxes 
        levied in each year or partial year of the term of the 
        facility's initial permanent financing or 25 years, whichever is 
        later. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 3.  Minnesota Statutes 2002, section 273.11, 
        subdivision 13, is amended to read: 
           Subd. 13.  [VALUATION OF INCOME-PRODUCING PROPERTY.] 
        Beginning with the 1995 assessment, only accredited assessors or 
        senior accredited assessors or other licensed assessors who have 
        successfully completed at least two income-producing property 
        appraisal courses may value income-producing property for ad 
        valorem tax purposes.  "Income-producing property" as used in 
        this subdivision means the taxable property in class 3a and 3b 
        in section 273.13, subdivision 24; class 4a and 4c, except for 
        seasonal recreational property not used for commercial purposes, 
        and class 4d in section 273.13, subdivision 25; and class 5 in 
        section 273.13, subdivision 31.  "Income-producing property" 
        includes any property in class 4e in section 273.13, subdivision 
        25, that would be income-producing property under the definition 
        in this subdivision if it were not substandard.  
        "Income-producing property appraisal course" as used in this 
        subdivision means a course of study of approximately 30 
        instructional hours, with a final comprehensive test.  An 
        assessor must successfully complete the final examination for 
        each of the two required courses.  The course must be approved 
        by the board of assessors. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        the 2004 assessment for property taxes payable in 2005. 
           Sec. 4.  Minnesota Statutes 2002, 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 has a class rate of 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 
        1.5 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 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; 
           (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; and 
           (8) residential real estate, a portion of which is used by 
        the owner for homestead purposes, and that is also a place of 
        lodging, if all of the following criteria are met: 
           (i) rooms are provided for rent to transient guests that 
        generally stay for periods of 14 or fewer days; 
           (ii) meals are provided to persons who rent rooms, the cost 
        of which is incorporated in the basic room rate; 
           (iii) meals are not provided to the general public except 
        for special events on fewer than seven days in the calendar year 
        preceding the year of the assessment; and 
           (iv) the owner is the operator of the property. 
        The market value subject to the 4c classification under this 
        clause is limited to five rental units.  Any rental units on the 
        property in excess of five, must be valued and assessed as class 
        3a.  The portion of the property used for purposes of a 
        homestead by the owner must be classified as class 1a property 
        under subdivision 22. 
           Class 4c property has a class rate of 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, (iii) 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, (v) the market value of property described in clauses 
        (2) and (6) has a class rate of 1.25 percent, and (vi) that 
        portion of the market value of property in clause (8) qualifying 
        for class 4c property 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 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 beginning with 
        the 2004 assessment, for property taxes payable in 2005. 
           Sec. 5.  Minnesota Statutes 2002, section 275.025, 
        subdivision 1, is amended to read: 
           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. 
           The commissioner shall increase or decrease the preliminary 
        or final rate for a year as necessary to account for errors and 
        tax base changes that affected a preliminary or final rate for 
        either of the two preceding years.  Adjustments are allowed to 
        the extent that the necessary information is available to the 
        commissioner at the time the rates for a year must be certified, 
        and for the following reasons: 
           (1) an erroneous report of taxable value by a local 
        official; 
           (2) an erroneous calculation by the commissioner; and 
           (3) an increase or decrease in taxable value for 
        commercial-industrial or seasonal residential recreational 
        property reported on the abstracts of tax lists submitted under 
        section 275.29 that was not reported on the abstracts of 
        assessment submitted under section 270.11, subdivision 2, for 
        the same year. 
        The commissioner may, but need not, make adjustments if the 
        total difference in the tax levied for the year would be less 
        than $100,000. 
           [EFFECTIVE DATE.] This section is effective June 30, 2003.  
           Sec. 6.  Minnesota Statutes 2002, 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 general tax, 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, and state general tax, net of the residential and 
        agricultural homestead credit under section 273.1384, 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) (ii) the proposed tax amount. 
           If the county levy under clause (2) includes an amount for 
        a lake improvement district as defined under sections 103B.501 
        to 103B.581, the amount attributable for that purpose must be 
        separately stated from the remaining county levy amount.  
           In the case of a town or the state general 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 the city of St. Paul, the levy for the St. Paul library 
        agency must 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, and 
        school district levy referenda, and; 
           (3) a levy limit increase referenda approved by the voters 
        by the first Tuesday after the first Monday in November of the 
        levy year as provided under section 275.73; 
           (3) (4) amounts necessary to pay cleanup or other costs due 
        to a natural disaster occurring after the date the proposed 
        taxes are certified; 
           (4) (5) amounts necessary to pay tort judgments against the 
        taxing authority that become final after the date the proposed 
        taxes are certified; and 
           (5) (6) 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 
        prepared in 2003 for taxes payable in 2004, and thereafter. 
           Sec. 7.  Minnesota Statutes 2002, 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; 
           (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) Southern St. Louis County Special Taxing District; 
        Chris Jensen Nursing Home under section 12; and 
           (25) 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. 
           Sec. 8.  Minnesota Statutes 2002, section 473.167, 
        subdivision 3, is amended to read: 
           Subd. 3.  [TAX.] The council may levy a tax on all taxable 
        property in the metropolitan area, as defined in section 
        473.121, to provide funds for loans made pursuant to 
        subdivisions 2 and 2a.  This tax for the right-of-way 
        acquisition loan fund shall be certified by the council, levied, 
        and collected in the manner provided by section 473.13.  The tax 
        shall be in addition to that authorized by section 473.249 and 
        any other law and shall not affect the amount or rate of taxes 
        which may be levied by the council or any metropolitan agency or 
        local governmental unit.  The amount of the levy shall be as 
        determined and certified by the council, provided that the tax 
        levied by the metropolitan council for the right-of-way 
        acquisition loan fund shall not exceed the product of (1) the 
        metropolitan council's property tax levy under this subdivision 
        for taxes payable in 1997 multiplied by (2) an index for market 
        valuation changes equal to the total market valuation of all 
        taxable property located within the metropolitan area for the 
        current taxes payable year divided by the total market valuation 
        of all taxable property located within the metropolitan area for 
        taxes payable in 1997. 
           For the purpose of determining the metropolitan council's 
        property tax levy limitation for the right-of-way acquisition 
        loan fund, "total market valuation" means the total market 
        valuation of all taxable property within the metropolitan area 
        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) $2,828,379 
        for taxes payable in 2004 and $2,828,379 for taxes payable in 
        2005.  The amount of the levy for taxes payable in 2006 and 
        subsequent years shall not exceed the product of (1) the 
        metropolitan council's property tax levy limitation under this 
        subdivision for the previous year, multiplied by (2) one plus a 
        percentage equal to the growth in the implicit price deflator as 
        defined in section 275.70, subdivision 2. 
           [EFFECTIVE DATE; APPLICATION.] This section is effective 
        the day following final enactment and applies in the counties of 
        Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
           Sec. 9.  Minnesota Statutes 2002, section 473.249, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [INDEXED LIMIT.] (a) The metropolitan 
        council may levy a tax on all taxable property in the 
        metropolitan area defined in section 473.121 to provide funds 
        for the purposes of sections 473.121 to 473.249 and for the 
        purpose of carrying out other responsibilities of the council as 
        provided by law.  This tax for general purposes shall be levied 
        and collected in the manner provided by section 473.13. 
           (b) The property tax levied by the metropolitan council for 
        general purposes shall not exceed $10,522,329 for taxes payable 
        in 2004 and $10,522,329 for taxes payable in 2005. 
           (c) The property tax levy limitation for general purposes 
        for taxes payable in 2006 and subsequent years shall not exceed 
        the product of:  (1) the metropolitan council's property tax 
        levy limitation for general purposes for the previous year 
        determined under this subdivision multiplied by (2) the lesser 
        of 
           (i) an index for market valuation changes equal to the 
        total market valuation of all taxable property located within 
        the metropolitan area for the current taxes payable year divided 
        by the total market valuation of all taxable property located 
        within the metropolitan area for the previous taxes payable 
        year; 
           (ii) an index equal to the implicit price deflator for 
        government consumption expenditures and gross investment for 
        state and local governments for the most recent month for which 
        data are available divided by the same implicit price deflator 
        for the same month of the previous year; or 
           (iii) 103 percent. 
           (c) For the purpose of determining the metropolitan 
        council's property tax levy limitation for general purposes, 
        "total market valuation" means the total market valuation of all 
        taxable property within the metropolitan area 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) one plus a percentage equal 
        to the growth in the implicit price deflator as defined in 
        section 275.70, subdivision 2. 
           [EFFECTIVE DATE; APPLICATION.] This section is effective 
        the day following final enactment and applies in the counties of 
        Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
           Sec. 10.  Minnesota Statutes 2002, section 473.253, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SOURCES OF FUNDS.] The council shall 
        credit to the livable communities demonstration account the 
        revenues provided in this subdivision.  This tax shall be levied 
        and collected in the manner provided by section 473.13.  The 
        levy shall not exceed the following amount for the years 
        specified:  
           (a)(1) for taxes payable in 1996, 50 percent of (i) the 
        metropolitan mosquito control commission's property tax levy for 
        taxes payable in 1995 multiplied by (ii) an index for market 
        valuation changes equal to the total market valuation of all 
        taxable property located within the metropolitan area for the 
        current taxes payable year divided by the total market valuation 
        of all taxable property located in the metropolitan area for the 
        previous taxes payable year; and 
           (2) for taxes payable in 1997 and subsequent years through 
        2003, the product of (i) the property tax levy limit under this 
        subdivision for the previous year multiplied by (ii) an index 
        for market valuation changes equal to the total market valuation 
        of all taxable property located within the metropolitan area for 
        the current taxes payable year divided by the total market 
        valuation of all taxable property located in the metropolitan 
        area for the previous taxes payable year; 
           (2) for taxes payable in 2004 and 2005, $8,259,070; and 
           (3) for taxes payable in 2006 and subsequent years, the 
        product of (i) the property tax levy limit under this 
        subdivision for the previous year multiplied by (ii) one plus a 
        percentage equal to the growth in the implicit price deflator as 
        defined in section 275.70, subdivision 2. 
           For the purposes of this subdivision, "total market 
        valuation" means the total market valuation of all taxable 
        property within the metropolitan area without valuation 
        adjustments for fiscal disparities under chapter 473F, tax 
        increment financing under sections 469.174 to 469.179, and high 
        voltage transmission lines under section 273.425. 
           (b) The metropolitan council, for the purposes of the fund, 
        is considered a unique taxing jurisdiction for purposes of 
        receiving aid pursuant to section 273.1398.  For aid to be 
        received in 1996, the fund's homestead and agricultural credit 
        base shall equal 50 percent of the metropolitan mosquito control 
        commission's certified homestead and agricultural credit aid for 
        1995, determined under section 273.1398, subdivision 2, less any 
        permanent aid reduction under section 477A.0132.  For aid to be 
        received under section 273.1398 in 1997 and subsequent years, 
        the fund's homestead and agricultural credit base shall be 
        determined in accordance with section 273.1398, subdivision 1. 
           [EFFECTIVE DATE; APPLICATION.] This section is effective 
        the day following final enactment and applies in the counties of 
        Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
           Sec. 11.  2003 First Special Session H.F. No. 1, article 2, 
        section 118, subdivision 6, if enacted, is amended to read: 
           Subd. 6.  [OPERATING COSTS OF PHASES THREE TO SIX.] (a) The 
        ongoing costs of the commissioner in operating phases three to 
        six of the statewide public safety radio communication system 
        shall be allocated among and paid by the following users, all in 
        accordance with the statewide public safety radio communication 
        system plan developed by the planning committee under section 
        473.907: 
           (1) the state of Minnesota for its operations using the 
        system; 
           (2) all local government units using the system; and 
           (3) other eligible users of the system. 
           (b) Each local government and other eligible users of 
        phases three to six of the system shall pay to the commissioner 
        all sums charged under this section, at the times and in the 
        manner determined by the commissioner.  The governing body of 
        each local government shall take all action that may be 
        necessary to provide the funds required for these payments and 
        to make the payments when due.  
           (c) If the governing body of any local government using 
        phase three, four, five, or six of the system fails to meet any 
        payment to the commissioner under this subdivision when due, the 
        commissioner may certify to the auditor of the county in which 
        the government unit is located the amount required for payment 
        of the amount due with interest at six percent per year.  The 
        auditor shall levy and extend the amount due, with interest, as 
        a tax upon all taxable property in the government unit for the 
        next calendar year, free from any existing limitations imposed 
        by law or charter.  This tax shall be collected in the same 
        manner as the general taxes of the government unit, and the 
        proceeds of the tax, when collected, shall be paid by the county 
        treasurer to the commissioner and credited to the government 
        unit for which the tax was levied. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 12.  [SOUTHERN ST. LOUIS COUNTY SPECIAL TAXING 
        DISTRICT; CHRIS JENSEN NURSING HOME.] 
           Subdivision 1.  [ESTABLISHED.] The Southern St. Louis 
        County Special Taxing District for purposes of the Chris Jensen 
        Nursing Home is established. 
           Subd. 2.  [AREA.] The district in subdivision 1 includes 
        all that part of St. Louis county comprising the cities of 
        Duluth, Proctor, Hermantown, Brookston, Floodwood, and 
        Meadowlands, and the townships of Alborn, Alden, Arrowhead, 
        Brevator, Canosia, Culver, Duluth, Elmer, Fine Lakes, Floodwood, 
        Fredenberg, Gensen, Grand Lake, Halden, Industrial, Lakewood, 
        Meadowlands, Midway, Ness, New Independence, Normanna, 
        Northland, North Star, Pequaywan, Prairie Lake, Rice Lake, 
        Solway, Stoney Brook, and Van Buren, and unorganized 
        congressional townships of 52-21, 53-16, and 53-15. 
           Subd. 3.  [PURPOSE.] The district established in 
        subdivision 1 is established to operate, maintain, and improve 
        the Chris Jensen Nursing Home. 
           Subd. 4.  [LEVY AUTHORITY.] The district established under 
        subdivision 1 is a public corporation and political subdivision 
        of the state with all the powers, rights, privileges, 
        immunities, and duties that may be validly granted to or imposed 
        on a municipal corporation as provided in this section, and a 
        special taxing district as defined by Minnesota Statutes, 
        section 275.066, clause (24), with the power to adopt and 
        certify a property tax levy to the county auditor.  The maximum 
        allowable annual levy for this special taxing district must not 
        exceed 1.90 percent of the taxable tax capacity of the district 
        in the first year and 1.33 percent of the taxable tax capacity 
        of the district in the second year and thereafter. 
           Subd. 5.  [MEMBERS; SELECTION; TERMS.] The nursing home 
        board is composed of nine members selected as follows: 
           (1) The mayor of the city of Duluth shall appoint three 
        members, subject to approval of the Duluth city council.  Each 
        member appointed under this clause must live in the city of 
        Duluth and at least two must be Duluth city council members.  
        All three appointees serve at the pleasure of the mayor, except 
        that each member shall serve until a successor has been selected 
        and qualified. 
           (2) The St. Louis county board shall appoint three county 
        board members.  Two appointees must reside in the city of Duluth 
        and one must reside in the district but outside the city of 
        Duluth.  The members appointed under this clause serve at the 
        pleasure of the county board, except that each member shall 
        serve until a successor has been selected and qualified. 
           (3) The St. Louis county auditor must convene and preside 
        at a meeting of the mayors of the cities of Hermantown and 
        Proctor at which the mayors must appoint a city council member 
        from one of the two cities to serve on the nursing home board.  
        The member appointed under this clause serves at the pleasure of 
        each mayor and either mayor may require the member's resignation 
        at any time, except that the member shall serve until a 
        successor has been selected and qualified. 
           (4) The St. Louis county auditor must convene and preside 
        at a meeting of the chairs of the town board of supervisors from 
        each of the townships of Rice Lake, Grand Lake, Lakewood, and 
        Canosia at which the chairs must appoint a resident of one of 
        the townships to serve on the nursing home board.  The term of 
        the first person appointed after the effective date of this 
        section shall expire December 31 of the third full year 
        following appointment.  Thereafter, the term of the person 
        appointed under this clause is three years, except that the 
        member shall serve until a successor has been selected and 
        qualified. 
           (5) The St. Louis county auditor must convene and preside 
        at a meeting of the mayors of the cities of Brookston, 
        Floodwood, and Meadowlands, and the chairs of the town boards of 
        supervisors from all of the townships in the district not 
        included in clause (4), at which the mayors and town board 
        chairs must appoint a resident of one of the cities, townships, 
        or unorganized areas to serve on the nursing home board.  The 
        term of the first person appointed after the effective date of 
        this section shall expire December 31 of the third full year 
        following appointment.  Thereafter, the term of the person 
        appointed under this clause is three years, except that the 
        member shall serve until a successor has been selected and 
        qualified. 
           After the initial appointment of members under clauses (3) 
        to (5), the nursing home board must notify the St. Louis county 
        auditor whenever a member needs to be appointed under these 
        clauses, and the county auditor must convene one or more 
        meetings as necessary to fill the position.  Meetings to make 
        appointments under clauses (3) to (5) are subject to the Open 
        Meeting Law, Minnesota Statutes, chapter 13D. 
           Subd. 6.  [TIME LIMITS FOR SELECTION; ALTERNATIVE 
        APPOINTMENT BY DISTRICT JUDGE.] The appointing authorities must 
        make initial appointments to the nursing home board as soon as 
        practicable, but no later than 60 days after the effective date 
        of this section.  A vacant position on the nursing home board 
        for which the member serves at the pleasure of the appointing 
        authority, must be filled as soon as practicable, but no later 
        than 60 days, after the vacancy occurs.  For members who serve 
        terms, a successor must be appointed at any time within 60 days 
        before the expiration of the term.  Each appointment for a 
        successor must be made in the same manner as the original 
        appointment.  If any appointment is not made within the time 
        required, the chief judge of the state's sixth judicial district 
        shall appoint a person who meets the qualifications for 
        appointment to the particular nursing home board seat, if 
        notified in writing by any interested person residing in the 
        district.  A person appointed by the chief judge serves as if 
        appointed by the regular appointing authority. 
           Subd. 7.  [VACANCIES.] A position must be deemed vacant 
        under the conditions specified in Minnesota Statutes, section 
        351.02, or if the member fails to attend two consecutive regular 
        meetings of the board without the consent of the board.  The 
        board may consent to a second consecutive absence up to 30 days 
        after it occurs.  A vacancy must be filled in the same manner as 
        the original appointment. 
           Subd. 8.  [OPEN MEETING LAW.] All meetings of the nursing 
        home board are subject to the Open Meeting Law, Minnesota 
        Statutes, chapter 13D. 
           Subd. 9.  [PROPERTY.] All assets, liabilities, employees, 
        and property of the Chris Jensen Nursing Home shall be 
        transferred to the nursing home board from St. Louis county on 
        the first day of the year after the formation of the nursing 
        home board, but no later than January 1, 2005. 
           Subd. 10.  [ORGANIZATION AND OPERATION OF THE BOARD.] The 
        nursing home board shall elect officers and establish bylaws at 
        its first meeting. 
           Subd. 11.  [EFFECTIVE DATE; LOCAL APPROVAL.] This section 
        is effective the day after the governing body of St. Louis 
        county and its chief clerical officer timely complete their 
        compliance with Minnesota Statutes, section 645.021, 
        subdivisions 2 and 3. 
           If effective before September 1, 2003, the first levy is 
        the payable 2004 levy; if effective between September 1, 2003, 
        and September 1, 2004, the first levy is the payable 2005 levy; 
        if effective after August 31, 2004, the first levy is the 
        payable 2006 levy. 
           Sec. 13.  [REPEALER.] 
           (a) Minnesota Statutes 2002, section 272.02, subdivision 
        26, is repealed. 
           (b) Minnesota Statutes 2002, section 275.065, subdivision 
        3a, is repealed. 
           [EFFECTIVE DATE.] Paragraph (a) is effective for the 2003 
        assessment and thereafter, for taxes payable in 2004 and 
        thereafter.  Paragraph (b) is repealed beginning with proposed 
        notices prepared in 2003 for taxes payable in 2004. 

                                   ARTICLE 5
                                   CITY AIDS
           Section 1.  Minnesota Statutes 2002, section 4A.02, is 
        amended to read: 
           4A.02 [STATE DEMOGRAPHER.] 
           (a) The director shall appoint a state demographer.  The 
        demographer must be professionally competent in demography and 
        must possess demonstrated ability based upon past performance.  
           (b) The demographer shall: 
           (1) continuously gather and develop demographic data 
        relevant to the state; 
           (2) design and test methods of research and data 
        collection; 
           (3) periodically prepare population projections for the 
        state and designated regions and periodically prepare 
        projections for each county or other political subdivision of 
        the state as necessary to carry out the purposes of this 
        section; 
           (4) review, comment on, and prepare analysis of population 
        estimates and projections made by state agencies, political 
        subdivisions, other states, federal agencies, or nongovernmental 
        persons, institutions, or commissions; 
           (5) serve as the state liaison with the United States 
        Bureau of the Census, coordinate state and federal demographic 
        activities to the fullest extent possible, and aid the 
        legislature in preparing a census data plan and form for each 
        decennial census; 
           (6) compile an annual study of population estimates on the 
        basis of county, regional, or other political or geographical 
        subdivisions as necessary to carry out the purposes of this 
        section and section 4A.03; 
           (7) by January 1 of each year, issue a report to the 
        legislature containing an analysis of the demographic 
        implications of the annual population study and population 
        projections; 
           (8) prepare maps for all counties in the state, all 
        municipalities with a population of 10,000 or more, and other 
        municipalities as needed for census purposes, according to scale 
        and detail recommended by the United States Bureau of the 
        Census, with the maps of cities showing precinct boundaries; 
           (9) prepare an estimate of population and of the number of 
        households for each governmental subdivision for which the 
        metropolitan council does not prepare an annual estimate, and 
        convey the estimates to the governing body of each political 
        subdivision by May 1 of each year; 
           (10) direct, under section 414.01, subdivision 14, and 
        certify population and household estimates of annexed or 
        detached areas of municipalities or towns after being notified 
        of the order or letter of approval by the Minnesota municipal 
        board; and 
           (11) prepare, for any purpose for which a population 
        estimate is required by law or needed to implement a law, a 
        population estimate of a municipality or town whose population 
        is affected by action under section 379.02 or 414.01, 
        subdivision 14; and 
           (12) prepare an estimate of average household size for each 
        statutory or home rule charter city with a population of 2,500 
        or more by May 1 of each year. 
           (c) A governing body may challenge an estimate made under 
        paragraph (b) by filing their specific objections in writing 
        with the state demographer by June 10.  If the challenge does 
        not result in an acceptable estimate by June 24, the governing 
        body may have a special census conducted by the United States 
        Bureau of the Census.  The political subdivision must notify the 
        state demographer by July 1 of its intent to have the special 
        census conducted.  The political subdivision must bear all costs 
        of the special census.  Results of the special census must be 
        received by the state demographer by the next April 15 to be 
        used in that year's May 1 estimate to the political subdivision 
        under paragraph (b). 
           [EFFECTIVE DATE.] This section is effective beginning July 
        1, 2003. 
           Sec. 2.  Minnesota Statutes 2002, section 477A.011, 
        subdivision 34, is amended to read: 
           Subd. 34.  [CITY REVENUE NEED.] (a) For a city with a 
        population equal to or greater than 2,500, "city revenue need" 
        is the sum of (1) 3.462312 5.0734098 times the pre-1940 housing 
        percentage; plus (2) 2.093826 times the commercial industrial 
        percentage; plus (3) 6.862552 19.141678 times the population 
        decline percentage; plus (4) .00026 times the city 
        population (3) 2504.06334 times the road accidents factor; 
        plus (5) 152.0141 (4) 355.0547; minus (5) the metropolitan area 
        factor; minus (6) 49.10638 times the household size. 
           (b) For a city with a population less than 2,500, "city 
        revenue need" is the sum of (1) 1.795919 2.387 times the 
        pre-1940 housing percentage; plus (2) 1.562138 2.67591 times the 
        commercial industrial percentage; plus (3) 4.177568 3.16042 
        times the population decline percentage; plus (4) 1.04013 1.206 
        times the transformed population; minus (5) 107.475 62.772. 
           (c) The city revenue need cannot be less than zero. 
           (d) For calendar year 1998 2005 and subsequent years, the 
        city revenue need for a city, as determined in paragraphs (a) to 
        (c), is multiplied by the ratio of the annual implicit price 
        deflator for government consumption expenditures and gross 
        investment for state and local governments as prepared by the 
        United States Department of Commerce, for the most recently 
        available year to the 1993 2003 implicit price deflator for 
        state and local government purchases. 
           [EFFECTIVE DATE.] This section is effective for aid payable 
        in 2004 and thereafter. 
           Sec. 3.  Minnesota Statutes 2002, section 477A.011, 
        subdivision 36, is amended to read: 
           Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
        provided in this subdivision, "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 is zero. 
           (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) (c) 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) (d) 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) (e) 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) (f) Beginning in 2004, the city aid base for a city is 
        equal to the sum of its city aid base in 2003 and the amount of 
        additional aid it was certified to receive under section 477A.06 
        in 2003.  For 2004 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 2003. 
           (h) (g) 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) (h) 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) (i) 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) (j) 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) (k) 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) (l) 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) (m) 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) (n) 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) (o) 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. 
           (r) (p) The city aid base for a city is increased by 
        $200,000 beginning in calendar year 2003 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 
        2003 only, provided that the city qualified for an increase in 
        homestead and agricultural credit aid under Laws 1995, chapter 
        264, article 8, section 18. 
           (q) The city aid base for a city is increased by $200,000 
        in 2004 only and the maximum amount of total aid it may receive 
        under section 477A.013, subdivision 9, is also increased by 
        $200,000 in calendar year 2004 only, if the city is the site of 
        a nuclear dry cask storage facility. 
           (r) The city aid base for a city is increased by $10,000 in 
        2004 and thereafter and the maximum total aid it may receive 
        under section 477A.013, subdivision 9, is also increased by 
        $10,000 in calendar year 2004 only, if the city was included in 
        a federal major disaster designation issued on April 1, 1998 and 
        its pre-1940 housing stock was decreased by more than 40 percent 
        between 1990 and 2000. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        aids payable in 2004. 
           Sec. 4.  Minnesota Statutes 2002, section 477A.011, is 
        amended by adding a subdivision to read: 
           Subd. 38.  [HOUSEHOLD SIZE.] "Household size" means the 
        average number of persons per household in the jurisdiction as 
        most recently estimated and reported by the state demographer as 
        of July 1 of the aid calculation year. 
           [EFFECTIVE DATE.] This section is effective for aid payable 
        in 2004 and thereafter. 
           Sec. 5.  Minnesota Statutes 2002, section 477A.011, is 
        amended by adding a subdivision to read: 
           Subd. 39.  [ROAD ACCIDENTS FACTOR.] "Road accidents factor" 
        means the average annual number of vehicular accidents occurring 
        on public roads, streets, and alleys in the jurisdiction as 
        reported to the commissioner of revenue by the commissioner of 
        public safety by July 1 of the aid calculation year using the 
        most recent three-year period for which the commissioner of 
        public safety has complete information, divided by the 
        jurisdiction's population. 
           [EFFECTIVE DATE.] This section is effective for aid payable 
        in 2004 and thereafter. 
           Sec. 6.  Minnesota Statutes 2002, section 477A.011, is 
        amended by adding a subdivision to read: 
           Subd. 40.  [METROPOLITAN AREA FACTOR.] "Metropolitan area 
        factor" means 35.20915 for cities located in the metropolitan 
        area. 
           [EFFECTIVE DATE.] This section is effective for aid payable 
        in 2004 and thereafter. 
           Sec. 7.  Minnesota Statutes 2002, section 477A.013, 
        subdivision 8, is amended to read: 
           Subd. 8.  [CITY FORMULA AID.] In calendar year 1994 2004 
        and subsequent years, the formula aid for a city is equal to the 
        need increase percentage multiplied by the difference between 
        (1) the city's revenue need multiplied by its population, and 
        (2) the sum of the city's net tax capacity multiplied by the tax 
        effort rate, and the taconite aids under sections 298.28 and 
        298.282, multiplied by the following percentages:  
           (i) zero percent for aids payable in 2004; 
           (ii) 25 percent for aids payable in 2005; 
           (iii) 50 percent for aids payable in 2006; 
           (iv) 75 percent for aids payable in 2007; and 
           (v) 100 percent for aids payable in 2008 and thereafter.  
        No city may have a formula aid amount less than zero.  The need 
        increase percentage must be the same for all cities.  
           Notwithstanding the prior sentence, in 1995 only, the need 
        increase percentage for a city shall be twice the need increase 
        percentage applicable to other cities if:  
           (1) the city, in 1992 or 1993, transferred an amount from 
        governmental funds to their sewer and water fund, and 
           (2) the amount transferred exceeded their net levy for 
        taxes payable in the year in which the transfer occurred. 
           The applicable need increase percentage or percentages must 
        be calculated by the department of revenue so that the total of 
        the aid under subdivision 9 equals the total amount available 
        for aid under section 477A.03 after the subtraction under 
        section 477A.014, subdivisions 4 and 5.  
           [EFFECTIVE DATE.] This section is effective for aid payable 
        in 2004 and thereafter. 
           Sec. 8.  Minnesota Statutes 2002, section 477A.013, 
        subdivision 9, is amended to read: 
           Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
        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 aid for a first class city in 
        calendar year 1995 and thereafter, except for 2002, 2004 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 amount 
        of its aid in calendar year 2003 after the reductions under this 
        article.  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 2005 and 
        thereafter, 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.  For aids payable in 2002 only, 
        the total aid for any city, except a first class city, shall not 
        exceed the sum of (1) 40 percent of the city's net levy for 
        taxes payable in the year prior to the aid distribution plus (2) 
        40 percent of its total aid in the previous year under section 
        273.1398, subdivision 2, plus (3) its total aid in the previous 
        year under this section.  For aids payable in 2005 and 
        thereafter, the total aid for any city with a population of 
        2,500 or more may not decrease from its total aid under this 
        section in the previous year by an amount greater than ten 
        percent of its net levy in the year prior to the aid 
        distribution. 
           (d) For aids payable in 2004 only, the total aid for a city 
        with a population less than 2,500 may not be less than the 
        amount it was certified to receive in 2003 minus the greater of 
        (1) the reduction to this aid payment in 2003 under this 
        article, or (2) five percent of its 2003 aid amount.  For aids 
        payable in 2005 and thereafter, the total aid for a city with a 
        population less than 2,500 must not be less than the amount it 
        was certified to receive in the previous year minus five percent 
        of its 2003 certified aid amount. 
           [EFFECTIVE DATE.] This section is effective beginning with 
        aids payable in 2004. 
           Sec. 9.  Minnesota Statutes 2002, 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 2002 under section 477A.013, 
        subdivision 9, are limited to the amounts certified to be paid 
        in the previous year, adjusted for inflation as provided in 
        subdivision 3, and increased by $140,000,000.  For aids payable 
        in 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 2005 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.  If no percent is established by law, the appropriation is 
        limited to the total amount appropriated for this purpose in the 
        previous year.  
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2004 and thereafter. 
           Sec. 10.  Minnesota Statutes 2002, section 477A.03, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [CITIES.] For aids payable in 2004, the total 
        aids paid under section 477A.013, subdivision 9, are limited to 
        $429,000,000.  For aids payable in 2005 and thereafter, the 
        total aids paid under section 477A.013, subdivision 9, are 
        increased to $437,052,000. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2004 and thereafter. 
           Sec. 11.  [DEFINITIONS.] 
           (a) For purposes of sections 11 to 13, the following terms 
        have the meanings given them in this section. 
           (b) The 2003 and 2004 "levy plus aid revenue base" for a 
        city is the sum of that city's certified property tax levy for 
        taxes payable in 2003, plus the sum of the amounts the city was 
        certified to receive in 2003 as: 
           (1) local government aid under Minnesota Statutes, section 
        477A.013; 
           (2) existing low-income housing aid under Minnesota 
        Statutes, section 477A.06; 
           (3) new construction low-income housing aid under Minnesota 
        Statutes, section 477A.065; and 
           (4) taconite aids under Minnesota Statutes, sections 298.28 
        and 298.282, including any aid which was required to be placed 
        in a special fund for expenditure in the next succeeding year. 
           (c) "Total revenue" for a city for calendar year 2003 is 
        the total revenue amount for that city, as reported by the state 
        auditor for calendar year 2000, excluding grants between 
        political subdivisions and amounts borrowed by the city but 
        including net transfers from an enterprise fund. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 12.  [2003 CITY AID REDUCTIONS.] 
           The commissioner of revenue shall compute an aid reduction 
        amount for each city for 2003 equal to 9.3 percent of the city's 
        levy plus aid revenue base for 2003. 
           The reduction amount is limited to 3.7 percent of the 
        city's total revenues for 2003 if a city has a population under 
        1,000 or if the city has a three-year levy plus aid revenue base 
        increase average of less than two percent.  For all other 
        cities, the reduction amount is limited to 5.25 percent of the 
        city's total revenues for 2003. 
           The reduction is further limited to the sum of the city's 
        payable 2003 distribution pursuant to Minnesota Statutes, 
        section 477A.013, and related sections, and the city's payable 
        2003 reimbursement under Minnesota Statutes, section 273.1384. 
           The reduction is applied first to the city's distribution 
        pursuant to Minnesota Statutes, section 477A.013, and then if 
        necessary to the city's reimbursements pursuant to Minnesota 
        Statutes, section 273.1384. 
           To the extent that sufficient information is available on 
        each successive payment date within the year, the commissioner 
        of revenue shall pay any remaining 2003 distribution or 
        reimbursement amount reduced under this section in equal 
        installments on the payment dates provided in law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 13.  [2004 CITY AID REDUCTIONS.] 
           The commissioner of revenue shall compute an aid reduction 
        amount for 2004 for each city as provided in this section. 
           The initial aid reduction amount for each city is the 
        amount by which the city's aid distribution under Minnesota 
        Statutes, section 477A.013, and related provisions payable in 
        2003 exceeds the city's 2004 distribution under those provisions.
           The minimum aid reduction amount for a city is the amount 
        of its reduction in 2003 under section 12.  If a city receives 
        an increase to its city aid base under Minnesota Statutes, 
        section 477A.011, subdivision 36, its minimum aid reduction is 
        reduced by an equal amount. 
           The maximum aid reduction amount for a city is an amount 
        equal to 14 percent of the city's total 2004 levy plus aid 
        revenue base, except that if the city has a city net tax 
        capacity for aids payable in 2004, as defined in Minnesota 
        Statutes, section 477A.011, subdivision 20, of $700 per capita 
        or less, the maximum aid reduction shall not exceed an amount 
        equal to 13 percent of the city's total 2004 levy plus aid 
        revenue base. 
           If the initial aid reduction amount for a city is less than 
        the minimum aid reduction amount for that city, the final aid 
        reduction amount for the city is the sum of the initial aid 
        reduction amount and the lesser of the amount of the city's 
        payable 2004 reimbursement under Minnesota Statutes, section 
        273.1384, or the difference between the minimum and initial aid 
        reduction amounts for the city. 
           If the initial aid reduction amount for a city is greater 
        than the maximum aid reduction amount for the city, the city 
        receives an additional distribution under this section equal to 
        the result of subtracting the maximum aid reduction amount from 
        the initial aid reduction amount.  This distribution shall be 
        paid in equal installments in 2004 on the dates specified in 
        Minnesota Statutes, section 477A.015.  The amount necessary for 
        these additional distributions is appropriated to the 
        commissioner of revenue from the general fund in fiscal year 
        2005. 
           The initial aid reduction is applied to the city's 
        distribution pursuant to Minnesota Statutes, section 477A.013, 
        and any aid reduction in excess of the initial aid reduction is 
        applied to the city's reimbursements pursuant to Minnesota 
        Statutes, section 273.1384. 
           To the extent that sufficient information is available on 
        each payment date in 2004, the commissioner of revenue shall pay 
        the reimbursements reduced under this section in equal 
        installments on the payment dates provided in law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 14.  [REPEALER.] 
           Minnesota Statutes 2002, sections 477A.011, subdivision 37; 
        477A.0132; 477A.03, subdivisions 3 and 4; 477A.06; and 477A.07, 
        are repealed effective for aids payable in 2004 and thereafter. 

                                   ARTICLE 6
                          OTHER INTERGOVERNMENTAL AIDS
           Section 1.  Minnesota Statutes 2002, section 273.1398, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [TEMPORARY AID OFFSET FOR COURT COSTS.] (a) In 
        calendar years 2004 and 2005, the commissioner of revenue shall 
        pay the amounts determined in paragraph (d) to the eligible 
        counties on the dates specified in subdivision 6.  By July 15 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, 2003, the supreme court shall determine 
        and certify to the commissioner of revenue for each county the 
        county's share of the costs to be assumed in the judicial 
        districts specified under section 480.183, subdivision 1, during 
        each of the succeeding fiscal year years. 
           (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 preceding certification 2002, increased by two 
        percent for counties in districts one and three, and by 4.04 
        percent for counties in districts six and ten.  
           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).  
           (d) Payments to a county under subdivision 2 or section 
        273.166 for 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 75 percent of the net cost to the 
        state for assumption of district court costs as certified in 
        paragraph (a). For calendar year 2004, each county in judicial 
        districts one and three shall receive an amount equal to 25 
        percent of the amount certified under paragraph (b), and each 
        county in judicial districts six and ten shall receive an amount 
        equal to the amount certified under paragraph (b).  For calendar 
        year 2005, each county in judicial districts six and ten shall 
        receive an amount equal to 25 percent of the amount certified 
        under paragraph (b), and each county in judicial districts one 
        and three receives zero. 
           (e) Payments to a county under subdivision 2 or section 
        273.166 for the calendar year 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. 
           (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 for aid payable 
        in 2004 and 2005. 
           Sec. 2.  Minnesota Statutes 2002, section 273.1398, 
        subdivision 4c, is amended 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 temporary court maintenance of effort cost 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 (b), multiplied by 
        the maintenance of effort percent for the calendar year as 
        determined under subdivision 4b, paragraph (a), and (2) the 
        amount calculated under subdivision 4b, paragraph (a), for 
        calendar year 2003, except that the payment under this section 
        is reduced by 50 percent in the calendar year in which the 
        district is transferred to the state.  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 for aid payable 
        in 2004 and 2005 for counties in judicial districts one, three, 
        six, and ten. 
           Sec. 3.  Minnesota Statutes 2002, section 273.1398, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PAYMENT.] The commissioner shall certify the 
        aids provided in subdivisions 2, 2b, 3, and 5 subdivision 3 
        before September 1 of the year preceding the distribution year 
        to the county auditor of the affected local government.  The 
        aids provided in subdivisions 2, 2b, 3, 4a, and 5 4c must be 
        paid to local governments other than school districts at the 
        times provided in section 477A.015 for payment of local 
        government aid to taxing jurisdictions, except that the first 
        one-half payment of disparity reduction aid provided in 
        subdivision 3 must be paid on or before August 31.  The 
        disparity reduction credit provided in subdivision 4 must be 
        paid to taxing jurisdictions other than school districts at the 
        time provided in section 473H.10, subdivision 3.  Aids and 
        credit reimbursements to school districts must be certified to 
        the commissioner of children, families, and learning and paid 
        under section 273.1392.  Payment shall not be made to any taxing 
        jurisdiction that has ceased to levy a property tax.  
           [EFFECTIVE DATE.] This section is effective for aid payable 
        in 2004 and thereafter. 
           Sec. 4.  Minnesota Statutes 2002, section 273.1398, 
        subdivision 8, is amended to read: 
           Subd. 8.  [APPROPRIATION.] (a) An amount sufficient to pay 
        the aids and credits provided under this section for school 
        districts, intermediate school districts, or any group of school 
        districts levying as a single taxing entity, is annually 
        appropriated from the general fund to the commissioner of 
        children, families, and learning.  An amount sufficient to pay 
        the aids and credits provided under this section for counties, 
        cities, towns, and special taxing districts is annually 
        appropriated from the general fund to the commissioner of 
        revenue.  A jurisdiction's aid amount may be increased or 
        decreased based on any prior year adjustments for homestead 
        credit or other property tax credit or aid programs. 
           (b) The commissioner of finance shall bill the commissioner 
        of revenue for the cost of preparation of local impact notes as 
        required by section 3.987 only to the extent to which those 
        costs exceed those costs incurred in fiscal year 1997 and for 
        any other new costs attributable to the local impact note 
        function required by section 3.987, not to exceed $100,000 in 
        fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and 
        thereafter. 
           The commissioner of revenue shall deduct the amount billed 
        under this paragraph from aid payments to be made to cities and 
        counties under subdivision 2 on a pro rata basis.  The amount 
        deducted under this paragraph is appropriated to the 
        commissioner of finance for the preparation of local impact 
        notes.  
           [EFFECTIVE DATE.] This section is effective for aid payable 
        in 2004 and thereafter. 
           Sec. 5.  [477A.0124] [COUNTY PROGRAM AID.] 
           Subdivision 1.  [CALENDAR YEAR 2004.] In 2004, each county 
        shall receive program aid in an amount equal to the sum of: 
           (1) the amount of county attached machinery aid computed 
        for the county for payment in 2003 under section 273.138 prior 
        to any reduction under laws enacted in 2003; 
           (2) the amount of county homestead and agricultural credit 
        aid computed for the county for payment in 2003 under section 
        273.1398, subdivision 2, prior to any reduction under laws 
        enacted in 2003, minus the amount certified under section 
        273.1398, subdivision 4a, paragraph (b), for counties in 
        judicial districts one, three, six, and ten, and by 25 percent 
        of the amount certified under section 273.1398, subdivision 4a, 
        paragraph (b), for counties located in judicial districts two 
        and four; 
           (3) the amount of county manufactured home homestead and 
        agricultural credit aid computed for the county for payment in 
        2003 under section 273.166 prior to any reduction under laws 
        enacted in 2003; 
           (4) the amount of county criminal justice aid computed for 
        the county for payment in 2003 under section 477A.0121 prior to 
        any reduction under laws enacted in 2003; and 
           (5) the amount of county family preservation aid computed 
        for the county for payment in 2003 under section 477A.0122 prior 
        to any reduction under laws enacted in 2003. 
           Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
        section, the following terms have the meanings given them. 
           (b) "County program aid" means the sum of "county need aid,"
        "county tax base equalization aid," and "county transition aid." 
           (c) "Age-adjusted population" means a county's population 
        multiplied by the county age index. 
           (d) "County age index" means the percentage of the 
        population over age 65 within the county divided by the 
        percentage of the population over age 65 within the state, 
        except that the age index for any county may not be greater than 
        1.8 nor less than 0.8. 
           (e) "Population over age 65" means the population over age 
        65 established as of July 1 in an aid calculation year by the 
        most recent federal census, by a special census conducted under 
        contract with the United States Bureau of the Census, by a 
        population estimate made by the metropolitan council, or by a 
        population estimate of the state demographer made pursuant to 
        section 4A.02, whichever is the most recent as to the stated 
        date of the count or estimate for the preceding calendar year. 
           (f) "Part I crimes" means the three-year average annual 
        number of Part I crimes reported for each county by the 
        department of public safety for the most recent years available. 
        By July 1 of each year, the commissioner of public safety shall 
        certify to the commissioner of revenue the number of Part I 
        crimes reported for each county for the three most recent 
        calendar years available. 
           (g) "Households receiving food stamps" means the average 
        monthly number of households receiving food stamps for the three 
        most recent years for which data is available.  By July 1 of 
        each year, the commissioner of human services must certify to 
        the commissioner of revenue the average monthly number of 
        households in the state and in each county that receive food 
        stamps, for the three most recent calendar years available. 
           (h) "County net tax capacity" means the net tax capacity of 
        the county, computed analogously to city net tax capacity under 
        section 477A.011, subdivision 20. 
           Subd. 3.  [COUNTY NEED AID.] For 2005 and subsequent years, 
        the money appropriated to county need aid each calendar year 
        shall be allocated as follows:  40 percent based on each 
        county's share of age-adjusted population, 40 percent based on 
        each county's share of the state total of households receiving 
        food stamps, and 20 percent based on each county's share of the 
        state total of Part I crimes. 
           Subd. 4.  [COUNTY TAX-BASE EQUALIZATION AID.] (a) For 2005 
        and subsequent years, the money appropriated to county tax-base 
        equalization aid each calendar year shall be apportioned among 
        the counties according to each county's tax-base equalization 
        aid factor. 
           (b) A county's tax-base equalization aid factor is equal to 
        the amount by which (i) $185 times the county's population, 
        exceeds (ii) 9.45 percent of the county's net tax capacity. 
           (c) In the case of a county with a population less than 
        10,000, the factor determined in paragraph (b) shall be 
        multiplied by a factor of three. 
           (d) In the case of a county with a population greater than 
        or equal to 10,000, but less than 12,500, the factor determined 
        in paragraph (b) shall be multiplied by a factor of two. 
           (e) In the case of a county with a population greater than 
        500,000, the factor determined in paragraph (b) shall be 
        multiplied by a factor of 0.25. 
           Subd. 5.  [COUNTY TRANSITION AID.] (a) For 2005, a county 
        is eligible for transition aid equal to the amount, if any, by 
        which: 
           (1) the difference between: 
           (i) the aid the county received under subdivision 1 in 
        2004, divided by the total aid paid to all counties under 
        subdivision 1, multiplied by $205,000,000; and 
           (ii) the amount of aid the county is certified to receive 
        in 2005 under subdivisions 3 and 4; 
        exceeds: 
           (2) three percent of the county's adjusted net tax capacity.
        A county's aid under this paragraph may not be less than zero. 
           (b) In 2006, a county is eligible to receive two-thirds of 
        the transition aid it received in 2005. 
           (c) In 2007, a county is eligible to receive one-third of 
        the transition aid it received in 2005. 
           (d) No county shall receive aid under this subdivision 
        after 2007. 
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2004 and subsequent years. 
           Sec. 6.  Minnesota Statutes 2002, section 477A.03, is 
        amended by adding a subdivision to read: 
           Subd. 2b.  [COUNTIES.] (a) For aids payable in calendar 
        year 2005 and thereafter, the total aids paid to counties under 
        section 477A.0124, subdivision 3, are limited to $100,500,000.  
        Each calendar year, $500,000 shall be retained by the 
        commissioner of revenue to make reimbursements to the 
        commissioner of finance for payments made under section 611.27.  
        For calendar year 2004, the amount shall be in addition to the 
        payments authorized under section 477A.0124, subdivision 1.  For 
        calendar year 2005 and subsequent years, the amount shall be 
        deducted from the appropriation under this paragraph.  The 
        reimbursements shall be to defray the additional costs 
        associated with court-ordered counsel under section 611.27.  Any 
        retained amounts not used for reimbursement in a year shall be 
        included in the next distribution of county need aid that is 
        certified to the county auditors for the purpose of property tax 
        reduction for the next taxes payable year. 
           (b) For aids payable in 2005 and thereafter, the total aids 
        under section 477A.0124, subdivision 4, are limited to 
        $105,000,000.  The commissioner of finance shall bill the 
        commissioner of revenue for the cost of preparation of local 
        impact notes as required by section 3.987, not to exceed 
        $207,000 in fiscal year 2004 and thereafter.  The commissioner 
        of children, families, and learning shall bill the commissioner 
        of revenue for the cost of preparation of local impact notes for 
        school districts as required by section 3.987, not to exceed 
        $7,000 in fiscal year 2004 and thereafter.  The commissioner of 
        revenue shall deduct the amounts billed under this paragraph 
        from the appropriation under this paragraph.  The amounts 
        deducted are appropriated to the commissioner of finance and the 
        commissioner of children, families, and learning for the 
        preparation of local impact notes. 
           [EFFECTIVE DATE.] This section is effective for aid payable 
        in 2004 and thereafter. 
           Sec. 7.  Minnesota Statutes 2002, section 611.27, 
        subdivision 13, is amended to read: 
           Subd. 13.  [PUBLIC DEFENSE SERVICES; CORRECTIONAL FACILITY 
        INMATES.] All billings for services rendered and ordered under 
        subdivision 7 shall require the approval of the chief district 
        public defender before being forwarded on a monthly basis to the 
        state public defender.  In cases where adequate representation 
        cannot be provided by the district public defender and where 
        counsel has been appointed under a court order, the state public 
        defender shall forward to the commissioner of finance all 
        billings for services rendered under the court order.  The 
        commissioner shall pay for services from county criminal justice 
        aid retained by the commissioner of revenue for that purpose 
        under section 477A.0121, subdivision 4, or from county program 
        aid retained by the commissioner of revenue for that purpose 
        under section 477A.0124, subdivision 1, clause (4), or 477A.03, 
        subdivision 2b, paragraph (a). 
           The costs of appointed counsel and associated services in 
        cases arising from new criminal charges brought against indigent 
        inmates who are incarcerated in a Minnesota state correctional 
        facility are the responsibility of the state board of public 
        defense.  In such cases the state public defender may follow the 
        procedures outlined in this section for obtaining court-ordered 
        counsel. 
           [EFFECTIVE DATE.] This section is effective for payments in 
        2004 and subsequent years. 
           Sec. 8.  Minnesota Statutes 2002, section 611.27, 
        subdivision 15, is amended to read: 
           Subd. 15.  [COSTS OF TRANSCRIPTS.] In appeal cases and 
        postconviction cases where the state public defender's office 
        does not have sufficient funds to pay for transcripts and other 
        necessary expenses because it has spent or committed all of the 
        transcript funds in its annual budget, the state public defender 
        may forward to the commissioner of finance all billings for 
        transcripts and other necessary expenses.  The commissioner 
        shall pay for these transcripts and other necessary expenses 
        from county criminal justice aid retained by the commissioner of 
        revenue under section 477A.0121, subdivision 4, or from county 
        program aid retained by the commissioner of revenue for that 
        purpose under section 477A.0124, subdivision 1, clause (4), or 
        477A.03, subdivision 2, paragraph (c). 
           [EFFECTIVE DATE.] This section is effective for payments in 
        2004 and subsequent years. 
           Sec. 9.  [DEFINITIONS.] 
           (a) For purposes of sections 9 to 15, the following terms 
        have the meanings given them in this section. 
           (b) The 2003 and 2004 "levy plus aid revenue base" for a 
        county is the sum of that county's certified property tax levy 
        for taxes payable in 2003, plus the sum of the amounts the 
        county was certified to receive in the designated calendar year 
        as: 
           (1) homestead and agricultural credit aid under Minnesota 
        Statutes, section 273.1398, subdivision 2, plus any additional 
        aid under section 16, minus the amount calculated under section 
        273.1398, subdivision 4a, paragraph (b), for counties in 
        judicial districts one, three, six, and ten, and 25 percent of 
        the amount calculated under section 273.1398, subdivision 4a, 
        paragraph (b), for counties in judicial districts two and four; 
           (2) the amount of county manufactured home homestead and 
        agricultural credit aid computed for the county for payment in 
        2003 under section 273.166; 
           (3) criminal justice aid under Minnesota Statutes, section 
        477A.0121; 
           (4) family preservation aid under Minnesota Statutes, 
        section 477A.0122; 
           (5) taconite aids under Minnesota Statutes, sections 298.28 
        and 298.282, including any aid which was required to be placed 
        in a special fund for expenditure in the next succeeding year; 
        and 
           (6) county program aid under section 477A.0124. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 10.  [2003 COUNTY AID REDUCTIONS.] 
           The commissioner of revenue shall compute an aid reduction 
        amount for each county for 2003 equal to 3.21 percent of the 
        county's levy plus aid revenue base for 2003. 
           The reduction is limited to the sum of the county's payable 
        2003 distributions pursuant to Minnesota Statutes, sections 
        273.138; 273.1384; 273.1398, subdivision 2; 273.166; 477A.0121; 
        and 477A.0122. 
           The aid reduction is applied first to reduce the county's 
        2003 distribution pursuant to Minnesota Statutes, section 
        273.138, then to reduce, in this sequence, the aid payable in 
        2003 under Minnesota Statutes, sections 273.1398, subdivision 2; 
        273.166; 477A.0121; and 477A.0122.  Then, if necessary, the 
        county's reimbursements pursuant to Minnesota Statutes, section 
        273.1384, are to be reduced. 
           To the extent that sufficient information is available on 
        each successive payment date within the year, the commissioner 
        of revenue shall pay any remaining 2003 distribution or 
        reimbursement amount reduced under this section in equal 
        installments on the payment dates provided in law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 11.  [2003 TOWNSHIP AID REDUCTIONS.] 
           The commissioner of revenue shall compute an aid reduction 
        amount for each township for 2003 equal to two percent of the 
        town's certified levy for taxes payable in 2003. 
           The reduction is limited to the amount of the town's 
        payable 2003 reimbursement pursuant to Minnesota Statutes, 
        section 273.1384.  
           To the extent that sufficient information is available on 
        each successive payment date within the year, the commissioner 
        of revenue shall pay any remaining 2003 reimbursement amount for 
        the town in equal installments on the payment dates provided in 
        law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 12.  [2003 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 
           The commissioner of revenue shall compute an aid reduction 
        amount for each special taxing district for 2003 equal to 1.5 
        percent of the district's certified levy for taxes payable in 
        2003. 
           The reduction is limited to the amount of the district's 
        payable 2003 reimbursement pursuant to Minnesota Statutes, 
        section 273.1384. 
           To the extent that sufficient information is available on 
        each successive payment date within the year, the commissioner 
        of revenue shall pay any remaining 2003 reimbursement amount for 
        the district in equal installments on the payment dates provided 
        in law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 13.  [2004 COUNTY AID REDUCTIONS.] 
           The commissioner of revenue shall compute an aid reduction 
        amount for 2004 for each county as provided in this section. 
           The commissioner of revenue shall compute an aid reduction 
        amount for each county for 2004 equal to 5.689 percent of the 
        county's levy plus aid revenue base for 2004. 
           The reduction is further limited to the sum of the county's 
        payable 2004 distributions under Minnesota Statutes, sections 
        477A.0124 and 273.1384. 
           The aid reduction is applied first to the county's 
        distributions pursuant to Minnesota Statutes, section 477A.0124, 
        and then, if necessary, to reduce the county's reimbursements 
        pursuant to Minnesota Statutes, section 273.1384. 
           To the extent that sufficient information is available on 
        each payment date in 2004, the commissioner of revenue shall pay 
        any remaining 2004 distribution or reimbursement amount reduced 
        under this section in equal installments on the payment dates 
        provided in law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 14.  [2004 TOWNSHIP AID REDUCTIONS.] 
           The commissioner of revenue shall compute an aid reduction 
        amount for each township for 2004 equal to three percent of the 
        town's certified levy for taxes payable in 2003.  
           The reduction is limited to the amount of the town's 
        payable 2004 reimbursement pursuant to Minnesota Statutes, 
        section 273.1384. 
           To the extent that sufficient information is available on 
        each successive payment date within the year, the commissioner 
        of revenue shall pay any remaining 2004 reimbursement amount for 
        the town in equal installments on the payment dates provided in 
        law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 15.  [2004 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 
           The commissioner of revenue shall compute an aid reduction 
        amount for each special taxing district for 2004 equal to two 
        percent of the district's certified levy for taxes payable in 
        2003.  
           The reduction is limited to the amount of the district's 
        payable 2004 reimbursement pursuant to Minnesota Statutes, 
        section 273.1384. 
           To the extent that sufficient information is available on 
        each successive payment date within the year, the commissioner 
        of revenue shall pay any remaining 2004 reimbursement amount for 
        the district in equal installments on the payment dates provided 
        in law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 16.  [HACA ADJUSTMENT; COURT TAKEOVER ERROR.] 
           In calendar years 2003 and 2004, any county whose 2002 aid 
        reduction, related to the state assumption of funding for 
        mandated court services, was based on costs not assumed by the 
        state shall receive the following aid adjustments; 
           (1) in calendar year 2003, a permanent increase of $50,000 
        in its aid payment under Minnesota Statutes, section 273.1398, 
        subdivision 2, above its certified 2003 aid amount; and 
           (2) in calendar year 2004, a permanent increase of an 
        additional $50,000 in its county program aid payment under 
        Minnesota Statutes, section 477A.0124, subdivision 1, clause (2).
           [EFFECTIVE DATE.] This section is effective for aids 
        payable in 2003 and 2004. 
           Sec. 17.  [REPEALER.] 
           (a) Minnesota Statutes 2002, sections 273.138, subdivision 
        2, and the parts of subdivisions 5 and 7 relating to counties; 
        273.1398, subdivisions 2, 2c, and 4d; 273.166; 477A.0121; 
        477A.0122; 477A.0123; 477A.0132; 477A.03, subdivision 3; and 
        477A.07, are repealed effective for aid payable in 2004 and 
        thereafter. 
           (b) Minnesota Statutes 2002, section 273.138, subdivisions 
        3 and 6, and the parts of subdivisions 5 and 7 relating to 
        school districts are repealed effective for calendar year 2003. 

                                   ARTICLE 7 
                                  LEVY LIMITS 
           Section 1.  Minnesota Statutes 2002, section 275.70, 
        subdivision 5, is amended to read: 
           Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
        portions of ad valorem taxes levied by a local governmental unit 
        for the following purposes or in the following manner: 
           (1) to pay the costs of the principal and interest on 
        bonded indebtedness or to reimburse for the amount of liquor 
        store revenues used to pay the principal and interest due on 
        municipal liquor store bonds in the year preceding the year for 
        which the levy limit is calculated; 
           (2) to pay the costs of principal and interest on 
        certificates of indebtedness issued for any corporate purpose 
        except for the following: 
           (i) tax anticipation or aid anticipation certificates of 
        indebtedness; 
           (ii) certificates of indebtedness issued under sections 
        298.28 and 298.282; 
           (iii) certificates of indebtedness used to fund current 
        expenses or to pay the costs of extraordinary expenditures that 
        result from a public emergency; or 
           (iv) certificates of indebtedness used to fund an 
        insufficiency in tax receipts or an insufficiency in other 
        revenue sources; 
           (3) to provide for the bonded indebtedness portion of 
        payments made to another political subdivision of the state of 
        Minnesota; 
           (4) to fund payments made to the Minnesota state armory 
        building commission under section 193.145, subdivision 2, to 
        retire the principal and interest on armory construction bonds; 
           (5) property taxes approved by voters which are levied 
        against the referendum market value as provided under section 
        275.61; 
           (6) to fund matching requirements needed to qualify for 
        federal or state grants or programs to the extent that either 
        (i) the matching requirement exceeds the matching requirement in 
        calendar year 2001, or (ii) it is a new matching requirement 
        that did not exist prior to 2002; 
           (7) to pay the expenses reasonably and necessarily incurred 
        in preparing for or repairing the effects of natural disaster 
        including the occurrence or threat of widespread or severe 
        damage, injury, or loss of life or property resulting from 
        natural causes, in accordance with standards formulated by the 
        emergency services division of the state department of public 
        safety, as allowed by the commissioner of revenue under section 
        275.74, subdivision 2; 
           (8) pay amounts required to correct an error in the levy 
        certified to the county auditor by a city or county in a levy 
        year, but only to the extent that when added to the preceding 
        year's levy it is not in excess of an applicable statutory, 
        special law or charter limitation, or the limitation imposed on 
        the governmental subdivision by sections 275.70 to 275.74 in the 
        preceding levy year; 
           (9) to pay an abatement under section 469.1815; 
           (10) to pay any costs attributable to increases in the 
        employer contribution rates under chapter 353 that are effective 
        after June 30, 2001; 
           (11) to pay the operating or maintenance costs of a county 
        jail as authorized in section 641.01 or 641.262, or of a 
        correctional facility as defined in section 241.021, subdivision 
        1, paragraph (5), to the extent that the county can demonstrate 
        to the commissioner of revenue that the amount has been included 
        in the county budget as a direct result of a rule, minimum 
        requirement, minimum standard, or directive of the department of 
        corrections, or to pay the operating or maintenance costs of a 
        regional jail as authorized in section 641.262.  For purposes of 
        this clause, a district court order is not a rule, minimum 
        requirement, minimum standard, or directive of the department of 
        corrections.  If the county utilizes this special levy, except 
        to pay operating or maintenance costs of a new regional jail 
        facility under sections 641.262 to 641.264 which will not 
        replace an existing jail facility, any amount levied by the 
        county in the previous levy year for the purposes specified 
        under this clause and included in the county's previous year's 
        levy limitation computed under section 275.71, shall be deducted 
        from the levy limit base under section 275.71, subdivision 2, 
        when determining the county's current year levy limitation.  The 
        county shall provide the necessary information to the 
        commissioner of revenue for making this determination; 
           (12) to pay for operation of a lake improvement district, 
        as authorized under section 103B.555.  If the county utilizes 
        this special levy, any amount levied by the county in the 
        previous levy year for the purposes specified under this clause 
        and included in the county's previous year's levy limitation 
        computed under section 275.71 shall be deducted from the levy 
        limit base under section 275.71, subdivision 2, when determining 
        the county's current year levy limitation.  The county shall 
        provide the necessary information to the commissioner of revenue 
        for making this determination; 
           (13) to repay a state or federal loan used to fund the 
        direct or indirect required spending by the local government due 
        to a state or federal transportation project or other state or 
        federal capital project.  This authority may only be used if the 
        project is not a local government initiative; 
           (14) for counties only, to pay the costs reasonably 
        expected to be incurred in 2002 related to the redistricting of 
        election districts and establishment of election precincts under 
        sections 204B.135 and 204B.14, the notice required by section 
        204B.14, subdivision 4, and the reassignment of voters in the 
        statewide registration system, not to exceed $1 per capita, 
        provided that the county shall distribute a portion of the 
        amount levied under this clause equal to 25 cents times the 
        population of the city to all cities in the county with a 
        population of 30,000 or more; 
           (15) to pay for court administration costs as required 
        under section 273.1398, subdivision 4b, less the (i) county's 
        share of transferred fines and fees collected by the district 
        courts in the county for calendar year 2001 and (ii) the aid 
        amount certified to be paid to the county in 2004 under section 
        273.1398, subdivision 4c; however, for taxes levied to pay for 
        these costs in the year in which the court financing is 
        transferred to the state, the amount under this section clause 
        is limited to one-third of the aid reduction the amount of aid 
        the county is certified to receive under section 273.1398, 
        subdivision 4a; and 
           (16) (15) to fund a police or firefighters relief 
        association as required under section 69.77 to the extent that 
        the required amount exceeds the amount levied for this purpose 
        in 2001. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2004 and thereafter. 
           Sec. 2.  Minnesota Statutes 2002, section 275.71, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
        local governmental unit for taxes levied in 2001 is equal to the 
        greater of: 
           (1) the sum of its adjusted levy limit base for taxes 
        levied in 1999 plus the amount it levied in 1999 under Minnesota 
        Statutes 1999 Supplement, section 275.70, subdivision 5, clauses 
        (8) and (13), multiplied by: 
           (i) one plus the percentage growth in the implicit price 
        deflator for the 12-month period ending March 30, 2000; 
           (ii) one plus a percentage equal to the annual percentage 
        increase in the estimated number of households, if any, for the 
        most recent 12-month period that was available on July 1, 2000; 
        and 
           (iii) one plus a percentage equal to 50 percent of the 
        percentage increase in the taxable market value of the 
        jurisdiction due to new construction of class 3 property, as 
        defined in section 273.13, subdivision 24, except for 
        state-assessed utility and railroad operating property, for the 
        most recent year for which data was available as of July 1, 
        2000; or 
           (2) an amount equal to: 
           (i) the sum of the amount it levied in 2000 plus the amount 
        of aids it was certified to receive in calendar year 2001 under 
        sections 273.1398, 298.282, 477A.011 to 477A.03, prior to any 
        aid reductions under section 273.1399, subdivision 5, 477A.06, 
        and 477A.065; less 
           (ii) the amount it levied in 2000 that would qualify as 
        special levies under section 275.70, subdivision 6, for taxes 
        levied in 2001.  The local governmental unit shall provide the 
        commissioner of revenue with sufficient information to make this 
        calculation. 
           (b) If the governmental unit was not subject to levy limits 
        for taxes levied in 1999, its levy limit base for taxes levied 
        in 2001 is equal to the amount calculated under paragraph (a), 
        clause (2). 
           (c) The levy limit base for a local governmental unit for 
        taxes levied in 2002 2003 is equal to its adjusted levy limit 
        base in the previous year, plus the amount of tree growth tax it 
        received in calendar year 2001 under sections 270.31 to 270.39, 
        and plus, in the case of a city, the amount it was certified to 
        receive in calendar year 2001 under section 273.166, subject to 
        any adjustments under section 275.72, plus any aid amounts 
        received in 2003 under section 273.138 or 273.166, minus the 
        difference between its levy limit under subdivision 5 for taxes 
        levied in 2002 and the amount it actually levied under that 
        subdivision in that year, and (3) certified property tax 
        replacement aid payable in 2003 under section 174.242. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2003. 
           Sec. 3.  Minnesota Statutes 2002, section 275.71, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ADJUSTED LEVY LIMIT BASE.] (a) For taxes levied 
        in 2001 and 2002 2003, the adjusted levy limit base is equal to 
        the levy limit base computed under subdivisions 2 and 3 or 
        section 275.72, multiplied reduced by: 
           (1) one plus a percentage equal to the percentage growth in 
        the implicit price deflator; 
           (2) one plus a percentage equal to the percentage increase 
        in number of households, if any, for the most recent 12-month 
        period for which data is available; and 
           (3) one plus a percentage equal to 50 percent of the 
        percentage increase in the taxable market value of the 
        jurisdiction due to new construction of class 3 property, as 
        defined in section 273.13, subdivision 24, except for 
        state-assessed utility and railroad operating property, for the 
        most recent year for which data is available 40 percent of the 
        difference between (1) the sum of 2003 certified aid payments, 
        under sections 273.138, 273.1398 except for amounts certified 
        under subdivision 4a, paragraph (b), 273.166, 477A.011 to 
        477A.03, 477A.06, and 477A.07, before any reduction under 
        articles 5 and 6, and (2) the sum of the aids paid in 2004 under 
        those same sections, after any reductions in 2004 under articles 
        5 and 6. 
           (b) For counties only, for taxes levied in 2001 and 2002, 
        the adjusted levy limit base is also reduced by any amount of 
        levy reduction required under section 275.07, subdivision 1, 
        paragraph (b), clause (ii).  For taxes levied in 2003 only, the 
        adjusted levy limit base is increased by 60 percent of the 
        difference between a jurisdiction's market value credit in 2003 
        before any reductions under articles 5 and 6, and its market 
        value credit in 2004 after reductions in articles 5 and 6. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2004. 
           Sec. 4.  Minnesota Statutes 2002, section 275.71, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PROPERTY TAX LEVY LIMIT.] Notwithstanding any 
        other provision of a municipal charter which limits ad valorem 
        taxes to a lesser amount, or which would require a separate 
        voter approval for any increase, For taxes levied in 2001 and 
        2002 2003, the property tax levy limit for a local governmental 
        unit is equal to its adjusted levy limit base determined under 
        subdivision 4 plus any additional levy authorized under section 
        275.73, which is levied against net tax capacity, reduced by the 
        sum of (i) the total amount of aids and reimbursements that the 
        local governmental unit is certified to receive under sections 
        477A.011 to 477A.014, except for the increases in city aid bases 
        in calendar year 2002 under section 477A.011, subdivision 36, 
        paragraphs (n), (p), and (q) (l), (n), and (o), (ii) homestead 
        and agricultural aids it is certified to receive under section 
        273.1398, (iii) taconite aids under sections 298.28 and 298.282 
        including any aid which was required to be placed in a special 
        fund for expenditure in the next succeeding year, 
        (iv) low-income housing aid under sections 477A.06 and 
        477A.065 temporary court aid under section 273.1398, subdivision 
        4a, and (v) property tax replacement aids under section 
        174.242 estimated payments to the local governmental unit under 
        section 272.029, adjusted for any error in estimation in the 
        preceding year. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2004. 
           Sec. 5.  Minnesota Statutes 2002, section 275.71, 
        subdivision 6, is amended to read: 
           Subd. 6.  [LEVIES IN EXCESS OF LEVY LIMITS.] (a) If the 
        levy made by a city or county exceeds the levy limit provided in 
        sections 275.70 to 275.74, except when the excess levy is due to 
        the rounding of the rate in accordance with section 275.28, the 
        county auditor shall only extend the amount of taxes permitted 
        under sections 275.70 to 275.74, as provided for in section 
        275.16. 
           (b) For taxes levied in 2002, payable in 2003 only, if an 
        error was made in calculating the levy limit adjustment related 
        to a special levy for jails authorized under section 275.70, 
        subdivision 5, clause (11), in the previous year, the following 
        adjustments must be made: 
           (1) the county's levy limit base for taxes levied in 2002 
        must be based on the corrected adjusted levy limit base for 
        taxes levied in 2001; and 
           (2) the county's final levy limit for taxes levied in 2002, 
        payable in 2003, must also be temporarily reduced by an amount 
        equal to the amount of county levy spread in the previous year 
        in excess of the total recalculated levy limit plus authorized 
        special levies for taxes levied in 2001, payable in 2002. 
           (c) The commissioner of revenue shall inform counties 
        affected by paragraph (b) of the levy error and levy adjustments 
        required under this provision by June 15, 2002.  The county may 
        provide additional information to the commissioner indicating 
        why these adjustments may be in error by July 15, 2002.  The 
        commissioner shall certify the final levy adjustment to the 
        affected counties by August 1, 2002.  The levy reduction imposed 
        under paragraph (b), clause (2), may be spread over a period not 
        to exceed three years, upon agreement between the county and the 
        commissioner. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2004. 
           Sec. 6.  Minnesota Statutes 2002, section 275.72, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a 
        local governmental unit, as a result of an annexation 
        agreement prior to January 1, 1999, has different tax rates in 
        various parts of the jurisdiction due to different service 
        levels, it may petition the commissioner of revenue to adjust 
        its levy limits established under section 275.71.  The 
        commissioner shall adjust the levy limits to reflect scheduled 
        changes in tax rates related to increasing service levels in 
        areas currently receiving less city services.  The local 
        governmental unit shall provide the commissioner with any 
        information the commissioner deems necessary in making the levy 
        limit adjustment. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        levied in 2003, payable in 2004. 
           Sec. 7.  Minnesota Statutes 2002, section 275.73, 
        subdivision 2, is amended to read:  
           Subd. 2.  [LEVY EFFECTIVE DATE.] An additional levy 
        approved under subdivision 1 at a general or special election 
        held prior to September 1 on or before the first Tuesday after 
        the first Monday in November in any levy year may be levied in 
        that same levy year and subsequent levy years.  An additional 
        levy approved under subdivision 1 at a general or special 
        election held after August 31 the first Tuesday after the first 
        Monday in November in any levy year shall not be levied in that 
        same levy but may be levied in subsequent levy years. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2004. 
           Sec. 8.  Minnesota Statutes 2002, section 275.74, 
        subdivision 3, is amended to read: 
           Subd. 3.  [INFORMATION NECESSARY TO CALCULATE THE 2001 LEVY 
        LIMIT BASE.] A local governmental unit must provide the 
        commissioner with the information required to calculate the 
        alternative 2001 levy limit base amount under section 275.71, 
        subdivision 2, paragraph (a), clause (2), by July 20, 2001 of 
        the levy year.  If the information is not received by the 
        commissioner by that date, or is not deemed sufficient to make 
        the calculation under that clause, the commissioner has the 
        discretion to set the local governmental unit's 2001 levy limit 
        for all purposes including those purposes for which special 
        levies may be made, base equal to the amount calculated under 
        section 275.71, subdivision 2, paragraph (a), clause (1) of the 
        local governmental unit's certified levy for the prior year. 
           [EFFECTIVE DATE.] This section is effective for taxes 
        payable in 2004. 

                                   ARTICLE 8 
                               SALES AND USE TAX 
           Section 1.  Minnesota Statutes 2002, section 168.27, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [LIMITED USED VEHICLE LICENSE.] (a) A limited 
        used vehicle license shall be provided to a nonprofit charitable 
        organization that qualifies for tax exemption under section 
        501(c)(3) of the Internal Revenue Code whose primary business in 
        the transfer of vehicles is to raise funds for the corporation, 
        who acquires vehicles for sale through donation, and who uses a 
        licensed motor vehicle auctioneer to sell vehicles to retail 
        customers individuals, or who sells and reassigns vehicles to a 
        licensed motor vehicle dealer.  This license does not apply to 
        educational institutions whose primary purpose is to train 
        students in the repair, maintenance, and sale of motor 
        vehicles.  A limited used vehicle license allows the 
        organization to accept assignment of vehicles without the 
        requirement to transfer title as provided in section 168A.10 
        until sold or donated to a retail customer an individual.  
        Limited used vehicle license holders are not entitled to dealer 
        plates, and shall report all vehicles held for resale to the 
        department of public safety in a manner and time prescribed by 
        the department. 
           (b) A nonprofit charitable organization with a limited used 
        vehicle license shall, within 90 days after a vehicle donation, 
        send a donor a receipt for the donated vehicle which states its 
        model; age; level of use, including, but not limited to, the 
        mileage; its condition, and whether a visual inspection 
        disclosed any readily apparent defects that would materially 
        reduce the value of the property.  The receipt must include the 
        date of the donation and must state whether the vehicle was 
        operable or inoperable at the time of the donation. 
           [EFFECTIVE DATE.] This section is effective for sales and 
        transfers made after June 30, 2003. 
           Sec. 2.  Minnesota Statutes 2002, 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) or (g), 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 75 85 percent of the estimated June liability 
        to the commissioner.  
           (2) On or before August 20 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 electronic means on or before the 20th day of the month 
        following the month in which the taxable event occurred, or on 
        or before the 20th day of the month following the month in which 
        the sale is reported under section 289A.18, subdivision 4, 
        except for 75 85 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 20.  
           [EFFECTIVE DATE.] This section, paragraph (a), is effective 
        for sales and purchases made on or after January 1, 2004.  The 
        rest of this section is effective for payments made after 
        December 31, 2003. 
           Sec. 3.  Minnesota Statutes 2002, 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.66, 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.  
           (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 sales taxes 
        collected on sales occurring after June 30, 2003. 
           Sec. 4.  Minnesota Statutes 2002, section 289A.60, 
        subdivision 15, as amended by Laws 2003, chapter 127, article 6, 
        section 2, if enacted, is amended to read: 
           Subd. 15.  [ACCELERATED PAYMENT OF JUNE SALES TAX 
        LIABILITY; PENALTY FOR UNDERPAYMENT.] (a) For payments made 
        after December 31, 2002, and before January 1, 2004, if a vendor 
        is required by law to submit an estimation of June sales tax 
        liabilities and 75 percent payment by a certain date, the vendor 
        shall pay a penalty equal to ten percent of the amount of actual 
        June liability required to be paid in June less the amount 
        remitted in June.  The penalty must not be imposed, however, if 
        the amount remitted in June equals the lesser of 75 percent of 
        the preceding May's liability or 75 percent of the average 
        monthly liability for the previous calendar year. 
           (b) For payments made after December 31, 2003, if a vendor 
        is required by law to submit an estimation of June sales tax 
        liabilities and 85 percent payment by a certain date, the vendor 
        shall pay a penalty equal to ten percent of the amount of actual 
        June liability required to be paid in June less the amount 
        remitted in June.  The penalty must not be imposed, however, if 
        the amount remitted in June equals the lesser of 85 percent of 
        the preceding May's liability or 85 percent of the average 
        monthly liability for the previous calendar year. 
           [EFFECTIVE DATE.] Paragraph (a) of this section is 
        effective for payments made after December 31, 2002, and before 
        January 1, 2004.  Paragraph (b) of this section is effective for 
        payments made after December 31, 2003. 
           Sec. 5.  Minnesota Statutes 2002, section 297A.70, 
        subdivision 8, is amended to read: 
           Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
        SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 
        but not limited to, end user equipment used for construction, 
        ownership, operation, maintenance, and enhancement of the 
        backbone system of the regionwide public safety radio 
        communication system established under sections 473.891 to 
        473.905, are exempt.  For purposes of this subdivision, backbone 
        system is defined in section 473.891, subdivision 9.  This 
        subdivision is effective for purchases, sales, storage, use, or 
        consumption occurring before August 1, 2003 2005, in the 
        counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and 
        Washington. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 6.  Minnesota Statutes 2002, section 297A.70, 
        subdivision 10, is amended to read: 
           Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] (a) Tickets 
        or admissions to an event are exempt if all the gross receipts 
        are recorded as such, in accordance with generally accepted 
        accounting principles, on the books of one or more organizations 
        that whose primary mission is to provide an opportunity for 
        citizens of the state to participate in the creation, 
        performance, or appreciation of the arts, and provided that each 
        organization is: 
           (1) an organization described in section 501(c)(3) of the 
        Internal Revenue Code in which voluntary contributions make up 
        at least the following percent of the organization's annual 
        revenue in its most recently completed 12-month fiscal year, or 
        in the current year if the organization has not completed a 
        12-month fiscal year: 
           (i) for sales made after July 31, 2001, and before July 1, 
        2002, for the organization's fiscal year completed in calendar 
        year 2000, three percent; 
           (ii) for sales made on or after July 1, 2002, and on or 
        before June 30, 2003, for the organization's fiscal year 
        completed in calendar year 2001, three percent; 
           (iii) for sales made on or after July 1, 2003, and on or 
        before June 30, 2004, for the organization's fiscal year 
        completed in calendar year 2002, four percent; and 
           (iv) for sales made in each 12-month period, beginning on 
        July 1, 2004, and each subsequent year, for the organization's 
        fiscal year completed in the preceding calendar year, five 
        percent; 
           (2) a municipal board that promotes cultural and arts 
        activities; or 
           (3) the University of Minnesota, provided that the event is 
        held at a university-owned facility.  
        The exemption only applies if the entire proceeds, after 
        reasonable expenses, are used solely to provide opportunities 
        for citizens of the state to participate in the creation, 
        performance, or appreciation of the arts. 
           (b) Tickets or admissions to the premises of the Minnesota 
        zoological garden are exempt, provided that the exemption under 
        this paragraph does not apply to tickets or admissions to 
        performances or events held on the premises unless the 
        performance or event is sponsored and conducted exclusively by 
        the Minnesota zoological board or employees of the Minnesota 
        zoological garden. 
           Sec. 7.  Minnesota Statutes 2002, section 297A.70, 
        subdivision 14, is amended to read: 
           Subd. 14.  [FUND-RAISING EVENTS SPONSORED BY NONPROFIT 
        GROUPS.] (a) Sales of tangible personal property at, and 
        admission charges for fund-raising events sponsored by, a 
        nonprofit organization are exempt if: 
           (1) all gross receipts are recorded as such, in accordance 
        with generally accepted accounting practices, on the books of 
        the nonprofit organization; and 
           (2) the entire proceeds, less the necessary expenses for 
        the event, will be used solely and exclusively for charitable, 
        religious, or educational purposes.  Exempt sales include the 
        sale of food, meals, and drinks at the fund-raising event. 
           (b) This exemption is limited in the following manner: 
           (1) it does not apply to admission charges for events 
        involving bingo or other gambling activities or to charges for 
        use of amusement devices involving bingo or other gambling 
        activities; 
           (2) all gross receipts are taxable if the profits are not 
        used solely and exclusively for charitable, religious, or 
        educational purposes; 
           (3) it does not apply unless the organization keeps a 
        separate accounting record, including receipts and disbursements 
        from each fund-raising event that documents all deductions from 
        gross receipts with receipts and other records; 
           (4) it does not apply to any sale made by or in the name of 
        a nonprofit corporation as the active or passive agent of a 
        person that is not a nonprofit corporation; 
           (5) all gross receipts are taxable if fund-raising events 
        exceed 24 days per year; and 
           (6) it does not apply to fund-raising events conducted on 
        premises leased for more than five days but less than 30 days; 
        and 
           (7) it does not apply if the risk of the event is not borne 
        by the nonprofit organization and the benefit to the nonprofit 
        organization is less than the total amount of the state and 
        local tax revenues foregone by this exemption. 
           (c) For purposes of this subdivision, a "nonprofit 
        organization" means any unit of government, corporation, 
        society, association, foundation, or institution organized and 
        operated for charitable, religious, educational, civic, 
        fraternal, and senior citizens' or veterans' purposes, no part 
        of the net earnings of which inures to the benefit of a private 
        individual. 
           Sec. 8.  Minnesota Statutes 2002, section 297A.70, 
        subdivision 16, is amended to read: 
           Subd. 16.  [CAMP FEES.] Camp Fees to camps or other 
        recreation facilities are exempt for: 
           (1) services primarily for children, adults accompanying 
        children, or persons with disabilities; or 
           (2) educational or religious activities; 
        and the camp or facilities are owned and operated by an exempt 
        organization under section 501(c)(3) of the Internal Revenue 
        Code are exempt if the camps or facilities provide educational 
        and social activities for young people primarily age 18 and 
        under. 
           Sec. 9.  Minnesota Statutes 2002, section 297A.71, is 
        amended by adding a subdivision to read: 
           Subd. 32.  [WALKER ART CENTER.] Materials, equipment, and 
        supplies used or consumed in construction of the Walker Art 
        Center are exempt if more than $70,000,000 is raised from 
        private sources to pay for a portion of the costs of the project.
           [EFFECTIVE DATE.] This section is effective for purchases 
        made on or after June 1, 2003. 
           Sec. 10.  Minnesota Statutes 2002, section 297B.01, 
        subdivision 7, is amended to read: 
           Subd. 7.  [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 
        ACQUIRED.] (a) "Sale," "sells," "selling," "purchase," 
        "purchased," or "acquired" means any transfer of title of any 
        motor vehicle, whether absolutely or conditionally, for a 
        consideration in money or by exchange or barter for any purpose 
        other than resale in the regular course of business.  
           (b) Any motor vehicle utilized by the owner only by leasing 
        such vehicle to others or by holding it in an effort to so lease 
        it, and which is put to no other use by the owner other than 
        resale after such lease or effort to lease, shall be considered 
        property purchased for resale.  
           (c) The terms also shall include any transfer of title or 
        ownership of a motor vehicle by other means, for or without 
        consideration, except that these terms shall not include: 
           (1) the acquisition of a motor vehicle by inheritance from 
        or by bequest of, a decedent who owned it; 
           (2) the transfer of a motor vehicle which was previously 
        licensed in the names of two or more joint tenants and 
        subsequently transferred without monetary consideration to one 
        or more of the joint tenants; 
           (3) the transfer of a motor vehicle by way of gift between 
        individuals, or gift from a limited used vehicle dealer licensed 
        under section 168.27, subdivision 4a, to an individual, when the 
        transfer is with no monetary or other consideration or 
        expectation of consideration and the parties to the transfer 
        submit an affidavit to that effect at the time the title 
        transfer is recorded; 
           (4) the voluntary or involuntary transfer of a motor 
        vehicle between a husband and wife in a divorce proceeding; or 
           (5) the transfer of a motor vehicle by way of a gift to an 
        organization that is exempt from federal income taxation under 
        section 501(c)(3) of the Internal Revenue Code, as amended 
        through December 31, 1996, when the motor vehicle will be used 
        exclusively for religious, charitable, or educational purposes. 
           [EFFECTIVE DATE.] This section is effective for sales made 
        after June 30, 2007. 
           Sec. 11.  Laws 1980, chapter 511, section 1, subdivision 2, 
        as amended by Laws 1991, chapter 291, article 8, section 22, and 
        Laws 1998, chapter 389, article 8, section 25, is amended to 
        read: 
           Subd. 2.  Notwithstanding Minnesota Statutes, Section 
        477A.016, or any other law, ordinance, or city charter provision 
        to the contrary, the city of Duluth may, by ordinance, impose an 
        additional sales tax of up to one and one-half percent on sales 
        transactions which are described in Minnesota Statutes 2000, 
        Section 297A.01, Subdivision 3, Clause (c).  When the city 
        council determines that the taxes imposed under this subdivision 
        and under section 26 at a rate of one-half of one percent have 
        produced revenue sufficient to pay (1) the debt service on bonds 
        in a principal amount of $8,000,000 issued for capital 
        improvements to the Duluth Entertainment and Convention Center, 
        and (2) debt service on outstanding bonds originally issued in 
        the principal amount of $4,970,000 to finance capital 
        improvements to the Great Lakes Aquarium since the imposition of 
        the taxes at the rate of one and one-half percent, the rate of 
        the tax under this subdivision is reduced to one percent.  The 
        imposition of this tax shall not be subject to voter referendum 
        under either state law or city charter provisions.  
           [EFFECTIVE DATE.] This section is effective the day after 
        the governing body of the city of Duluth and its chief clerical 
        officer comply with Minnesota Statutes, section 645.021, 
        subdivisions 2 and 3. 
           Sec. 12.  Laws 1980, chapter 511, section 2, as amended by 
        Laws 1998, chapter 389, article 8, section 26, is amended to 
        read: 
           Sec. 2.  [CITY OF DULUTH; TAX ON RECEIPTS BY HOTELS AND 
        MOTELS.] 
           Notwithstanding Minnesota Statutes, Section 477A.016, or 
        any other law, or ordinance, or city charter provision to the 
        contrary, the city of Duluth may, by ordinance, impose an 
        additional tax of one and one-half percent upon the gross 
        receipts from the sale of lodging for periods of less than 30 
        days in hotels and motels located in the city.  When the city 
        council determines that the taxes imposed under this section and 
        section 25 at a rate of one-half of one percent have produced 
        revenue sufficient to pay (1) the debt service on bonds in a 
        principal amount of $8,000,000 issued for capital improvements 
        for the Duluth Entertainment and Convention Center, and (2) the 
        debt service on outstanding bonds originally issued in the 
        principal amount of $4,970,000 to finance capital improvements 
        to the Great Lakes Aquarium since the imposition of the taxes at 
        the rate of one and one-half percent, the rate of the tax under 
        this section is reduced to one percent.  The tax shall be 
        collected in the same manner as the tax set forth in the Duluth 
        city charter, section 54(d), paragraph one.  The imposition of 
        this tax shall not be subject to voter referendum under either 
        state law or city charter provisions. 
           [EFFECTIVE DATE.] This section is effective the day after 
        the governing body of the city of Duluth and its chief clerical 
        officer comply with Minnesota Statutes, section 645.021, 
        subdivisions 2 and 3. 
           Sec. 13.  Laws 1993, chapter 375, article 9, section 46, 
        subdivision 2, as amended by Laws 1997, chapter 231, article 7, 
        section 40, and Laws 1998, chapter 389, article 8, section 30, 
        is amended to read: 
           Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
        authorized by subdivision 1 may only be used by the city to pay 
        the cost of collecting the tax, and to pay for the following 
        projects or to secure or pay any principal, premium, or interest 
        on bonds issued in accordance with subdivision 3 for the 
        following projects.  
           (a) To pay all or a portion of the capital expenses of 
        construction, equipment and acquisition costs for the expansion 
        and remodeling of the St. Paul Civic Center complex, including 
        the demolition of the existing arena and the construction and 
        equipping of a new arena. 
           (b) The remainder of the funds must be spent for: 
           (1) capital projects to further residential, cultural, 
        commercial, and economic development in both downtown St. Paul 
        and St. Paul neighborhoods.  The amount apportioned under this 
        paragraph shall be no less than 60 percent of the revenues 
        derived from the tax each year, except to the extent that a 
        portion of that amount is required to pay debt service on (1) 
        bonds issued for the purposes of paragraph (a) prior to March 1, 
        1998; or (2) bonds issued for the purposes of paragraph (a) 
        after March 1, 1998, but only if the city council determines 
        that 40 percent of the revenues derived from the tax together 
        with other revenues pledged to the payment of the bonds, 
        including the proceeds of definitive bonds, is expected to 
        exceed the annual debt service on the bonds; and 
           (2) the capital and operating expenses of cultural 
        organizations in the city, provided that the amount spent under 
        this clause may not exceed must equal ten percent of the total 
        amount spent under this paragraph in any year.  
           (c) The amount apportioned under paragraph (b) shall be no 
        less than 60 percent of the revenues derived from the tax each 
        year, except to the extent that a portion of that amount is 
        required to pay debt service on (1) bonds issued for the 
        purposes of paragraph (a) prior to March 1, 1998; or (2) bonds 
        issued for the purposes of paragraph (a) after March 1, 1998, 
        but only if the city council determines that 40 percent of the 
        revenues derived from the tax together with other revenues 
        pledged to the payment of the bonds, including the proceeds of 
        definitive bonds, is expected to exceed the annual debt service 
        on the bonds. 
           (d) If in any year more than 40 percent of the revenue 
        derived from the tax authorized by subdivision 1 is used to pay 
        debt service on the bonds issued for the purposes of paragraph 
        (a) and to fund a reserve for the bonds, the amount of the debt 
        service payment that exceeds 40 percent of the revenue must be 
        determined for that year.  In any year when 40 percent of the 
        revenue produced by the sales tax exceeds the amount required to 
        pay debt service on the bonds and to fund a reserve for the 
        bonds under paragraph (a), the amount of the excess must be made 
        available for capital projects to further residential, cultural, 
        commercial, and economic development in the neighborhoods and 
        downtown until the cumulative amounts determined for all years 
        under the preceding sentence have been made available under this 
        sentence.  The amount made available as reimbursement in the 
        preceding sentence is not included in the 60 percent determined 
        under paragraph (b) (c). 
           (d) (e) By January 15 of each odd-numbered year, the mayor 
        and the city council must report to the legislature on the use 
        of sales tax revenues during the preceding two-year period. 
           [EFFECTIVE DATE.] This section is effective for 
        distributions after April 30, 2003. 
           Sec. 14.  Laws 1999, chapter 243, article 4, section 19, as 
        amended by Laws 2001, First Special Session chapter 5, article 
        12, section 88, is amended to read: 
           Sec. 19.  [EFFECTIVE DATES.] 
           Sections 1, 2, 5, 7, 9, and 11 are effective for sales and 
        purchases made after June 30, 1999.  
           Section 3 is effective for amended returns and refund 
        claims filed on or after July 1, 1999. 
           Section 4 is effective the day following final enactment 
        and applies retroactively to all open tax years and to 
        assessments and appeals under Minnesota Statutes, sections 
        289A.38 and 289A.65, for which the time limits have not expired 
        on the date of final enactment of this act.  The provisions of 
        Minnesota Statutes, section 289A.50, apply to refunds claimed 
        under section 4.  Refunds claimed under section 4 must be filed 
        by the later of December 31, 1999, or the time limit under 
        Minnesota Statutes, section 289A.40, subdivision 1. 
           Section 6 is effective retroactively for sales and 
        purchases made after June 30, 1998. 
           Section 8 is effective for purchases and sales made after 
        the date of final enactment.  
           Section 10 is effective for purchases made after the date 
        of final enactment and before July 1, 2003 2005. 
           Section 12 is effective the day after final enactment.  
        Section 12, paragraphs (a) to (c), apply to all local sales 
        taxes enacted after July 1, 1999.  Section 12, paragraph (d), 
        applies to all local sales taxes in effect at the time of, or 
        imposed after the day of, the enactment of this section. 
           Section 13 is effective the day following final enactment. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 15.  Laws 2001, First Special Session chapter 5, 
        article 12, section 95, as amended by Laws 2002, chapter 377, 
        article 3, section 24, is amended to read: 
           Sec. 95.  [REPEALER.] 
           (a) Minnesota Statutes 2000, sections 297A.61, subdivision 
        16; 297A.68, subdivision 21; and 297A.71, subdivision 2, are 
        repealed effective for sales and purchases occurring after June 
        30, 2001, except that the repeal of section 297A.61, subdivision 
        16, paragraph (d), is effective for sales and purchases 
        occurring after July 31, 2001. 
           (b) Minnesota Statutes 2000, sections 297A.62, subdivision 
        2, and 297A.64, subdivision 1, are repealed effective for sales 
        and purchases made after December 31, 2005. 
           (c) Minnesota Statutes 2000, section 297A.71, subdivision 
        15, is repealed effective for sales and purchases made after 
        June 30, 2002. 
           (d) Minnesota Statutes 2000, section 289A.60, subdivision 
        15, is repealed effective for liabilities after January 1, 2004. 
           (e) Minnesota Statutes 2000, section 297A.71, subdivision 
        16, is repealed effective for sales and purchases occurring 
        after December 31, 2002. 
           Sec. 16.  Laws 2002, chapter 377, article 3, section 15, 
        the effective date, is amended to read: 
           [EFFECTIVE DATE.] This section is effective for sales made 
        after August 31, 2002, and on or before December 31, 2003 2004. 
           Sec. 17.  [STATE CONVENTION CENTER.] 
           Subdivision 1.  [EXEMPTION.] Building materials, supplies, 
        or equipment used or consumed in constructing or equipping 
        improvements to a state convention center located in a city 
        outside the metropolitan area as defined in section 473.121, 
        subdivision 2, and governed by an 11-person board of which four 
        are appointed by the governor are exempt if the improvements are 
        financed in whole or in part by nonstate resources including, 
        but not limited to, revenue or general obligations issued by the 
        state convention center board of the city in which the center is 
        located.  This exemption applies regardless of whether the items 
        are purchased by the owner or by a contractor, subcontractor, or 
        builder. 
           Subd. 2.  [LEGISLATIVE INTENT.] This section is intended to 
        clarify the original intent of Minnesota Statutes, section 
        297A.71, subdivision 2. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment and applies retroactively to sales and 
        purchases made after June 30, 1995, and before July 1, 2001. 
           Sec. 18.  [LODGING TAX; ITASCA COUNTY AUTHORITY.] 
           Notwithstanding Minnesota Statutes, section 469.190, 
        subdivisions 1 and 4, no town located in Itasca county may 
        impose the local lodging tax authorized in Minnesota Statutes, 
        section 469.190, but the county of Itasca may impose the local 
        lodging tax authorized in that section in all towns and 
        unorganized territories within the county.  Any existing taxes 
        imposed by a town in that county will expire the day that a 
        county tax is imposed under this section. 
           If the county board exercises the authority under this 
        section, it must determine by resolution that imposition of the 
        tax is in the county's interest.  The resolution is subject to 
        the same notice and reverse referendum requirements that would 
        apply under Minnesota Statutes, section 469.190, subdivision 5, 
        if the county was only imposing the tax in an unorganized 
        territory.  The provisions of Minnesota Statutes, section 
        469.190, subdivisions 2, 3, 6, and 7, also apply to a tax 
        imposed under this section. 
           [EFFECTIVE DATE.] This section is effective the day after 
        the governing body of Itasca county and its chief clerical 
        officer comply with Minnesota Statutes, section 645.021, 
        subdivisions 2 and 3. 
           Sec. 19.  [STUDY OF LOCAL SALES TAX.] 
           (a) The commissioner of revenue shall study the local sales 
        taxes in Minnesota and provide a written report and 
        recommendations to the legislature, in compliance with Minnesota 
        Statutes, sections 3.195 and 3.197, by February 1, 2004.  The 
        study must report on: 
           (1) the authorized uses of revenue from local sales taxes 
        in effect, and the proposed uses of revenue from local sales 
        taxes recently proposed but not enacted; 
           (2) the local approval requirements for local sales taxes; 
           (3) the duration of local sales taxes and whether the full 
        duration authorized in law was necessary to provide sufficient 
        revenue for the authorized uses of the local sales tax; 
           (4) if the authorized uses of the local sales tax revenues 
        are regional in nature or limited in benefit to the jurisdiction 
        in which the tax is imposed; 
           (5) the estimated portion of revenue raised through the 
        local sales taxes that comes from (i) residents of the 
        jurisdiction in which the tax is imposed; (ii) Minnesota 
        residents who live outside the jurisdiction; and (iii) 
        non-Minnesota residents; 
           (6) the ability of jurisdictions to raise revenue by other 
        means, including the local property tax, and the extent to which 
        the jurisdictions assess property taxes in comparison to other 
        similar jurisdictions, and the state average, expressed in terms 
        of levy as a percent of adjusted net tax capacity; 
           (7) how jurisdictions that do not impose local sales taxes 
        raise revenue to fund projects similar to those funded through 
        local sales taxes; and 
           (8) the compatibility of local sales taxes with the 
        policies underlying the streamlined sales tax project. 
           (b) The study must make recommendations on: 
           (1) the appropriate role of local sales taxes as a part of 
        Minnesota's state and local revenue system, including: 
           (i) the appropriate uses of local sales taxes; and 
           (ii) whether local sales taxes should be limited to 
        jurisdictions that do not meet minimum thresholds of raising 
        revenue through other means, including local property tax; 
           (2) criteria to be used in evaluating local sales tax 
        proposals, designed to direct the use of local sales taxes 
        toward: 
           (i) projects that are regional in nature; 
           (ii) projects that require capital expenditures; and 
           (iii) projects in jurisdictions with inadequate fiscal 
        capacity to fund the projects through other means; and 
           (3) the feasibility of authorizing the commissioner of 
        revenue to approve or deny local sales taxes proposals based on 
        a uniform set of criteria, including the advisability of 
        requiring local approval by referendum or revocation by reverse 
        referendum, and if the referendum should be a criterion 
        necessary for a proposal to be considered for authorization or 
        should occur after authorization but as a condition of the tax 
        being implemented. 
           Sec. 20.  [REPEALER.] 
           (a) Minnesota Statutes 2002, section 37.13, subdivision 2, 
        is repealed effective July 1, 2003, but the repealer does not 
        apply to sales taxes retained on sales occurring before July 1, 
        2003. 
           (b) Minnesota Statutes 2002, section 325E.112, subdivision 
        2a, is repealed effective July 1, 2003. 

                                   ARTICLE 9 
                                 SPECIAL TAXES 
           Section 1.  Minnesota Statutes 2002, section 62J.692, 
        subdivision 4, is amended to read: 
           Subd. 4.  [DISTRIBUTION OF FUNDS.] (a) The commissioner 
        shall annually distribute medical education funds to all 
        qualifying applicants based on the following criteria:  
           (1) total medical education funds available for 
        distribution; 
           (2) total number of eligible trainee FTEs in each clinical 
        medical education program; and 
           (3) the statewide average cost per trainee as determined by 
        the application information provided in the first year of the 
        biennium, by type of trainee, in each clinical medical education 
        program.  
           (b) Funds distributed shall not be used to displace current 
        funding appropriations from federal or state sources.  
           (c) Funds shall be distributed to the sponsoring 
        institutions indicating the amount to be distributed to each of 
        the sponsor's clinical medical education programs based on the 
        criteria in this subdivision and in accordance with the 
        commissioner's approval letter.  Each clinical medical education 
        program must distribute funds to the training sites as specified 
        in the commissioner's approval letter.  Sponsoring institutions, 
        which are accredited through an organization recognized by the 
        department of education or the Centers for Medicare and Medicaid 
        Services, may contract directly with training sites to provide 
        clinical training.  To ensure the quality of clinical training, 
        those accredited sponsoring institutions must: 
           (1) develop contracts specifying the terms, expectations, 
        and outcomes of the clinical training conducted at sites; and 
           (2) take necessary action if the contract requirements are 
        not met.  Action may include the withholding of payments under 
        this section or the removal of students from the site.  
           (d) Any funds not distributed in accordance with the 
        commissioner's approval letter must be returned to the medical 
        education and research fund within 30 days of receiving notice 
        from the commissioner.  The commissioner shall distribute 
        returned funds to the appropriate training sites in accordance 
        with the commissioner's approval letter. 
           (e) The commissioner shall distribute by June 30 of each 
        year an amount equal to the funds transferred under section 
        62J.694, subdivision 2a, paragraph (b) subdivision 10, plus five 
        percent interest to the University of Minnesota board of regents 
        for the costs of the academic health center as specified under 
        section 62J.694, subdivision 2a, paragraph (a) instructional 
        costs of health professional programs at the academic health 
        center and for interdisciplinary academic initiatives within the 
        academic health center. 
           (f) A maximum of $150,000 of the funds dedicated to the 
        commissioner under section 297F.10, subdivision 1, paragraph 
        (b), clause (2), may be used by the commissioner for 
        administrative expenses associated with implementing this 
        section. 
           Sec. 2.  Minnesota Statutes 2002, section 62J.692, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [TRANSFERS FROM UNIVERSITY OF MINNESOTA.] Of the 
        funds dedicated to the academic health center under section 
        297F.10, subdivision 1, paragraph (b), clause (1), $4,850,000 
        shall be transferred annually to the commissioner of health no 
        later than April 15 of each year for distribution under 
        subdivision 4, paragraph (e).  
           Sec. 3.  Minnesota Statutes 2002, section 270.60, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
        shall pay to a county in which an Indian gaming casino is 
        located: 
           (1) ten percent of the state share of all taxes generated 
        from activities on reservations and collected under a tax 
        agreement under this section with the tribal government for the 
        reservation located in the county; or 
           (2) five percent of excise taxes collected by the state 
        that are determined by the department of revenue to have been 
        generated from activities on a reservation located in the 
        county, the tribal government of which does not have a tax 
        agreement under this section and did not have a tax agreement on 
        June 30, 2003. 
           If the tribe has casinos located in more than one county, 
        the payment must be divided equally among the counties in which 
        the casinos are located. 
           (b) The commissioner shall make the payments required under 
        this subdivision by February 28 of the year following the year 
        the taxes are collected. 
           (c) An amount sufficient to make the payments authorized by 
        this subdivision is annually appropriated from the general fund 
        to the commissioner.  
           [EFFECTIVE DATE.] This section is effective for taxes 
        collected after June 30, 2003. 
           Sec. 4.  Minnesota Statutes 2002, section 287.12, is 
        amended to read: 
           287.12 [TAXES, HOW APPORTIONED.] 
           (a) All taxes paid to the county treasurer under the 
        provisions of sections 287.01 to 287.12 must be apportioned, 97 
        percent to the general fund of the state, and three percent to 
        the county revenue fund. 
           (b) On or before the 20th day of each month the county 
        treasurer shall determine and pay to the commissioner of revenue 
        for deposit in the state treasury and credit to the general fund 
        the state's portion of the receipts from the mortgage registry 
        tax during the preceding month subject to the electronic payment 
        requirements of section 270.771.  The county treasurer shall 
        provide any related reports requested by the commissioner of 
        revenue. 
           (c) Counties must remit the state's portion of the June 
        receipts collected through June 25 and the estimated state's 
        portion of the receipts to be collected during the remainder of 
        the month to the commissioner of revenue two business days 
        before June 30 of each year.  The remaining amount of the June 
        receipts is due on August 20. 
           [EFFECTIVE DATE.] This section is effective January 1, 2004.
           Sec. 5.  Minnesota Statutes 2002, section 287.29, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPOINTMENT AND PAYMENT OF TAX PROCEEDS.] 
        (a) The proceeds of the taxes levied and collected under 
        sections 287.21 to 287.39 must be apportioned, 97 percent to the 
        general fund of the state, and three percent to the county 
        revenue fund. 
           (b) On or before the 20th day of each month, the county 
        treasurer shall determine and pay to the commissioner of revenue 
        for deposit in the state treasury and credit to the general fund 
        the state's portion of the receipts for deed tax from the 
        preceding month subject to the electronic transfer requirements 
        of section 270.771.  The county treasurer shall provide any 
        related reports requested by the commissioner of revenue. 
           (c) Counties must remit the state's portion of the June 
        receipts collected through June 25 and the estimated state's 
        portion of the receipts to be collected during the remainder of 
        the month to the commissioner of revenue two business days 
        before June 30 of each year.  The remaining amount of the June 
        receipts is due on August 20. 
           [EFFECTIVE DATE.] This section is effective January 1, 2004.
           Sec. 6.  Minnesota Statutes 2002, section 287.31, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [UNDERPAYMENTS OF ACCELERATED PAYMENT OF JUNE TAX 
        RECEIPTS.] If a county fails to timely remit the state portion 
        of the actual June tax receipts at the time required by section 
        287.12 or 287.29, the county shall pay a penalty equal to ten 
        percent of the state portion of actual June receipts less the 
        amount remitted to the commissioner of revenue in June.  The 
        penalty must not be imposed, however, if the amount remitted in 
        June equals either: 
           (1) 90 percent of the state's portion of the preceding 
        May's receipts; or 
           (2) 90 percent of the average monthly amount of the state's 
        portion for the previous calendar year. 
           [EFFECTIVE DATE.] This section is effective January 1, 2004.
           Sec. 7.  Minnesota Statutes 2002, section 297F.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
        or before the 18th day of each calendar month, a distributor 
        with a place of business in this state shall file a return with 
        the commissioner showing the quantity of cigarettes manufactured 
        or brought in from outside the state or purchased during the 
        preceding calendar month and the quantity of cigarettes sold or 
        otherwise disposed of in this state and outside this state 
        during that month.  A licensed distributor outside this state 
        shall in like manner file a return showing the quantity of 
        cigarettes shipped or transported into this state during the 
        preceding calendar month.  Returns must be made in the form and 
        manner prescribed by the commissioner and must contain any other 
        information required by the commissioner.  The return must be 
        accompanied by a remittance for the full unpaid tax liability 
        shown by it.  The return for the May liability and 85 percent of 
        the estimated June liability is due on the date payment of the 
        tax is due. 
           [EFFECTIVE DATE.] This section is effective January 1, 2004.
           Sec. 8.  Minnesota Statutes 2002, section 297F.09, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
        On or before the 18th day of each calendar month, a distributor 
        with a place of business in this state shall file a return with 
        the commissioner showing the quantity and wholesale sales price 
        of each tobacco product: 
           (1) brought, or caused to be brought, into this state for 
        sale; and 
           (2) made, manufactured, or fabricated in this state for 
        sale in this state, during the preceding calendar month.  
        Every licensed distributor outside this state shall in like 
        manner file a return showing the quantity and wholesale sales 
        price of each tobacco product shipped or transported to 
        retailers in this state to be sold by those retailers, during 
        the preceding calendar month.  Returns must be made in the form 
        and manner prescribed by the commissioner and must contain any 
        other information required by the commissioner.  The return must 
        be accompanied by a remittance for the full tax liability shown, 
        less 1.5 percent of the liability as compensation to reimburse 
        the distributor for expenses incurred in the administration of 
        this chapter.  The return for the May liability and 85 percent 
        of the estimated June liability is due on the date payment of 
        the tax is due. 
           [EFFECTIVE DATE.] The part of this section abolishing the 
        1.5 percent reimbursement is effective for sales made after June 
        30, 2003.  The rest of this section is effective January 1, 2004.
           Sec. 9.  Minnesota Statutes 2002, section 297F.09, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [ACCELERATED TAX PAYMENT; CIGARETTE OR TOBACCO 
        PRODUCTS DISTRIBUTOR.] A cigarette or tobacco products 
        distributor having a liability of $120,000 or more during a 
        fiscal year ending June 30, shall remit the June liability for 
        the next year in the following manner:  
           (a) Two business days before June 30 of the year, the 
        distributor shall remit the actual May liability and 85 percent 
        of the estimated June liability to the commissioner and file the 
        return in the form and manner prescribed by the commissioner. 
           (b) On or before August 18 of the year, the distributor 
        shall submit a return showing the actual June liability and pay 
        any additional amount of tax not remitted in June.  A penalty is 
        imposed equal to ten percent of the amount of June liability 
        required to be paid in June, less the amount remitted in June.  
        However, the penalty is not imposed if the amount remitted in 
        June equals the lesser of:  
           (1) 85 percent of the actual June liability; or 
           (2) 85 percent of the preceding May's liability. 
           [EFFECTIVE DATE.] This section is effective for taxpayers 
        having a liability of $120,000 or more during the fiscal year 
        ending June 30, 2003, and each fiscal year thereafter, and for 
        accelerated payments becoming due in 2004 and thereafter. 
           Sec. 10.  Minnesota Statutes 2002, section 297F.10, 
        subdivision 1, as amended by Laws 2003, chapter 128, article 1, 
        section 155, if enacted, is amended to read: 
           Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
        received from cigarette taxes, as well as related penalties, 
        interest, license fees, and miscellaneous sources of revenue 
        shall be deposited by the commissioner in the state treasury and 
        credited as follows: 
           (a) first to the general obligation special tax bond debt 
        service account in each fiscal year the amount required to 
        increase the balance on hand in the account on each December 1 
        to an amount equal to the full amount of principal and interest 
        to come due on all outstanding bonds whose debt service is 
        payable primarily from the proceeds of the tax to and including 
        the second following July 1; and 
           (b) after the requirements of paragraph (a) have been met, 
           (1) the revenue produced by 3.25 mills of the tax on 
        cigarettes weighing not more than three pounds a thousand and 
        6.5 mills of the tax on cigarettes weighing more than three 
        pounds a thousand must be credited to the academic health center 
        special revenue fund hereby created and is annually appropriated 
        to the board of regents at the University of Minnesota for 
        academic health center funding at the University of Minnesota; 
        and 
           (2) the revenue produced by 1.25 mills of the tax on 
        cigarettes weighing not more than three pounds a thousand and 
        2.5 mills of the tax on cigarettes weighing more than three 
        pounds a thousand must be credited to the medical education and 
        research costs account hereby created in the special revenue 
        fund and is annually appropriated to the commissioner of health 
        for distribution under section 62J.692, subdivision 4; and 
           (3) the balance of the revenues derived from taxes, 
        penalties, and interest (under this chapter) and from license 
        fees and miscellaneous sources of revenue shall be credited to 
        the general fund. 
           [EFFECTIVE DATE.] This section is effective for all 
        revenues received after June 30, 2003.  
           Sec. 11.  Minnesota Statutes 2002, section 297G.01, is 
        amended by adding a subdivision to read: 
           Subd. 21.  [LOW-ALCOHOL DAIRY COCKTAIL.] "Low-alcohol dairy 
        cocktail" means a premixed cocktail, or any other product except 
        liqueur-filled candy, that: 
           (1) consists primarily of milk products; 
           (2) contains distilled spirits; 
           (3) is drinkable as a beverage or is promoted as an 
        alcoholic product; and 
           (4) contains less than 3.2 percent alcohol by volume. 
           [EFFECTIVE DATE.] This section is effective for sales made 
        after June 30, 2003. 
           Sec. 12.  Minnesota Statutes 2002, section 297G.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 
        The following excise tax is imposed on all distilled spirits and 
        wine manufactured, imported, sold, or possessed in this state: 
                                        Standard             Metric
        (a) Distilled spirits,      $5.03 per gallon   $1.33 per liter
        liqueurs, cordials, 
        and specialties regardless 
        of alcohol content 
        (excluding ethyl alcohol) 
        (b) Wine containing         $ .30 per gallon   $ .08 per liter 
        14 percent or less
        alcohol by volume 
        (except cider as defined 
        in section 297G.01, 
        subdivision 3a) 
        (c) Wine containing         $ .95 per gallon   $ .25 per liter
        more than 14 percent 
        but not more than 21
        percent alcohol by volume 
        (d) Wine containing more    $1.82 per gallon   $ .48 per liter
        than 21 percent but not 
        more than 24 percent
        alcohol by volume 
        (e) Wine containing more    $3.52 per gallon   $ .93 per liter
        than 24 percent alcohol
        by volume
        (f) Natural and             $1.82 per gallon   $ .48 per liter
        artificial sparkling wines
        containing alcohol 
        (g) Cider as defined in     $ .15 per gallon   $ .04 per liter
        section 297G.01,
        subdivision 3a
        (h) Low alcohol dairy       $ .08 per gallon   $ .02 per liter
        cocktails
           In computing the tax on a package of distilled spirits or 
        wine, a proportional tax at a like rate on all fractional parts 
        of a gallon or liter must be paid, except that the tax on a 
        fractional part of a gallon less than 1/16 of a gallon is the 
        same as for 1/16 of a gallon. 
           [EFFECTIVE DATE.] This section is effective for sales made 
        after June 30, 2003. 
           Sec. 13.  Minnesota Statutes 2002, section 297G.09, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [ACCELERATED TAX PAYMENT; PENALTY.] A person 
        liable for tax under this chapter having a liability of $120,000 
        or more during a fiscal year ending June 30, shall remit the 
        June liability for the next year in the following manner:  
           (a) Two business days before June 30 of the year, the 
        taxpayer shall remit the actual May liability and 85 percent of 
        the estimated June liability to the commissioner and file the 
        return in the form and manner prescribed by the commissioner. 
           (b) On or before August 18 of the year, the taxpayer shall 
        submit a return showing the actual June liability and pay any 
        additional amount of tax not remitted in June.  A penalty is 
        imposed equal to ten percent of the amount of June liability 
        required to be paid in June less the amount remitted in June.  
        However, the penalty is not imposed if the amount remitted in 
        June equals the lesser of:  
           (1) 85 percent of the actual June liability; or 
           (2) 85 percent of the preceding May liability. 
           [EFFECTIVE DATE.] This section is effective for taxpayers 
        having a liability of $120,000 or more during the fiscal year 
        ending June 30, 2003, and each fiscal year thereafter, and for 
        accelerated payments becoming due in 2004 and thereafter. 
           Sec. 14.  Minnesota Statutes 2002, section 349.16, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [AGREEMENT TO PAY TAXES.] An organization which 
        is recognized by federal law, regulation, or other ruling as a 
        quasi-governmental organization that would otherwise be exempt 
        from one or more taxes under chapter 297E must agree to pay all 
        taxes under chapter 297E on lawful gambling conducted by the 
        organization as a condition of receiving or renewing a license 
        or premises permit. 

                                   ARTICLE 10 
                           LOCAL ECONOMIC DEVELOPMENT
           Section 1.  Minnesota Statutes 2002, section 469.169, is 
        amended by adding a subdivision to read: 
           Subd. 16.  [ADDITIONAL BORDER CITY ALLOCATIONS.] (a) In 
        addition to tax reductions authorized in subdivisions 7 to 15, 
        the commissioner shall allocate $750,000 for tax reductions to 
        border city enterprise zones in cities located on the western 
        border of the state.  The commissioner shall make allocations to 
        zones in cities on the western border on a per capita basis.  
        Allocations made under this subdivision may be used for tax 
        reductions as provided in section 469.171, or for other offsets 
        of taxes imposed on or remitted by businesses located in the 
        enterprise zone, but only if the municipality determines that 
        the granting of the tax reduction or offset is necessary in 
        order to retain a business within or attract a business to the 
        zone.  Any portion of the allocation provided in this paragraph 
        may alternatively be used for tax reductions under section 
        469.1732 or 469.1734. 
           (b) The commissioner shall allocate $750,000 for tax 
        reductions under section 469.1732 or 469.1734 to cities with 
        border city enterprise zones located on the western border of 
        the state.  The commissioner shall allocate this amount among 
        the cities on a per capita basis.  Any portion of the allocation 
        provided in this paragraph may alternatively be used for tax 
        reductions as provided in section 469.171. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 2.  Minnesota Statutes 2002, section 469.174, 
        subdivision 6, as amended by Laws 2003, chapter 127, article 10, 
        section 2, is amended to read: 
           Subd. 6.  [MUNICIPALITY.] "Municipality" means the city, 
        however organized, in which the district is located, with the 
        following exceptions: 
           (1) for a project undertaken pursuant to sections 469.152 
        to 469.165, "municipality" has the meaning given in sections 
        469.152 to 469.165; and 
           (2) for a project undertaken pursuant to sections 469.142 
        to 469.151, or a county or multicounty project undertaken 
        pursuant to sections 469.004 to 469.008 or special law, 
        "municipality" means the county in which the district is located.
           [EFFECTIVE DATE.] This section is effective for districts 
        for which the request for certification was made after July 31, 
        1979. 
           Sec. 3.  Minnesota Statutes 2002, section 469.174, 
        subdivision 10, is amended to read: 
           Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
        district" means a type of tax increment financing district 
        consisting of a project, or portions of a project, within which 
        the authority finds by resolution that one or more of the 
        following conditions, reasonably distributed throughout the 
        district, exists: 
           (1) parcels consisting of 70 percent of the area of the 
        district are occupied by buildings, streets, utilities, paved or 
        gravel parking lots, or other similar structures and more than 
        50 percent of the buildings, not including outbuildings, are 
        structurally substandard to a degree requiring substantial 
        renovation or clearance; or 
           (2) the property consists of vacant, unused, underused, 
        inappropriately used, or infrequently used railyards, rail 
        storage facilities, or excessive or vacated railroad 
        rights-of-way; or 
           (3) tank facilities, or property whose immediately previous 
        use was for tank facilities, as defined in section 115C.02, 
        subdivision 15, if the tank facilities: 
           (i) have or had a capacity of more than 1,000,000 gallons; 
           (ii) are located adjacent to rail facilities; and 
           (iii) have been removed or are unused, underused, 
        inappropriately used, or infrequently used; or 
           (4) a qualifying disaster area, as defined in subdivision 
        10b. 
           (b) For purposes of this subdivision, "structurally 
        substandard" shall mean containing defects in structural 
        elements or a combination of deficiencies in essential utilities 
        and facilities, light and ventilation, fire protection including 
        adequate egress, layout and condition of interior partitions, or 
        similar factors, which defects or deficiencies are of sufficient 
        total significance to justify substantial renovation or 
        clearance. 
           (c) A building is not structurally substandard if it is in 
        compliance with the building code applicable to new buildings or 
        could be modified to satisfy the building code at a cost of less 
        than 15 percent of the cost of constructing a new structure of 
        the same square footage and type on the site.  The municipality 
        may find that a building is not disqualified as structurally 
        substandard under the preceding sentence on the basis of 
        reasonably available evidence, such as the size, type, and age 
        of the building, the average cost of plumbing, electrical, or 
        structural repairs, or other similar reliable evidence.  The 
        municipality may not make such a determination without an 
        interior inspection of the property, but need not have an 
        independent, expert appraisal prepared of the cost of repair and 
        rehabilitation of the building.  An interior inspection of the 
        property is not required, if the municipality finds that (1) the 
        municipality or authority is unable to gain access to the 
        property after using its best efforts to obtain permission from 
        the party that owns or controls the property; and (2) the 
        evidence otherwise supports a reasonable conclusion that the 
        building is structurally substandard.  Items of evidence that 
        support such a conclusion include recent fire or police 
        inspections, on-site property tax appraisals or housing 
        inspections, exterior evidence of deterioration, or other 
        similar reliable evidence.  Written documentation of the 
        findings and reasons why an interior inspection was not 
        conducted must be made and retained under section 469.175, 
        subdivision 3, clause (1). 
           (d) A parcel is deemed to be occupied by a structurally 
        substandard building for purposes of the finding under paragraph 
        (a) if all of the following conditions are met: 
           (1) the parcel was occupied by a substandard building 
        within three years of the filing of the request for 
        certification of the parcel as part of the district with the 
        county auditor; 
           (2) the substandard building was demolished or removed by 
        the authority or the demolition or removal was financed by the 
        authority or was done by a developer under a development 
        agreement with the authority; 
           (3) the authority found by resolution before the demolition 
        or removal that the parcel was occupied by a structurally 
        substandard building and that after demolition and clearance the 
        authority intended to include the parcel within a district; and 
           (4) upon filing the request for certification of the tax 
        capacity of the parcel as part of a district, the authority 
        notifies the county auditor that the original tax capacity of 
        the parcel must be adjusted as provided by section 469.177, 
        subdivision 1, paragraph (h). 
           (e) For purposes of this subdivision, a parcel is not 
        occupied by buildings, streets, utilities, paved or gravel 
        parking lots, or other similar structures unless 15 percent of 
        the area of the parcel contains buildings, streets, utilities, 
        paved or gravel parking lots, or other similar structures. 
           (f) For districts consisting of two or more noncontiguous 
        areas, each area must qualify as a redevelopment district under 
        paragraph (a) to be included in the district, and the entire 
        area of the district must satisfy paragraph (a). 
           [EFFECTIVE DATE.] This section is effective for districts 
        for which the request for certification is made after the day 
        following final enactment. 
           Sec. 4.  Minnesota Statutes 2002, section 469.174, is 
        amended by adding a subdivision to read: 
           Subd. 10b.  [QUALIFIED DISASTER AREA.] A "qualified 
        disaster area" is an area that meets the following requirements: 
           (1) parcels consisting of 70 percent of the area of the 
        district were occupied by buildings, streets, utilities, paved 
        or gravel parking lots, or other similar structures immediately 
        before the disaster or emergency; 
           (2) the area of the district was subject to a disaster or 
        emergency, as defined in section 273.123, subdivision 1, within 
        the 18-month period ending on the day the request for 
        certification of the district is made; and 
           (3) 50 percent or more of the buildings in the area have 
        suffered substantial damage as a result of the disaster or 
        emergency. 
           [EFFECTIVE DATE.] This section is effective for districts 
        for which the request for certification is made after the day 
        following final enactment.  
           Sec. 5.  Minnesota Statutes 2002, section 469.1763, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 
        increment financing district, an amount equal to at least 75 
        percent of the total revenue derived from tax increments paid by 
        properties in the district must be expended on activities in the 
        district or to pay bonds, to the extent that the proceeds of the 
        bonds were used to finance activities in the district or to pay, 
        or secure payment of, debt service on credit enhanced bonds.  
        For districts, other than redevelopment districts for which the 
        request for certification was made after June 30, 1995, the 
        in-district percentage for purposes of the preceding sentence is 
        80 percent.  Not more than 25 percent of the total revenue 
        derived from tax increments paid by properties in the district 
        may be expended, through a development fund or otherwise, on 
        activities outside of the district but within the defined 
        geographic area of the project except to pay, or secure payment 
        of, debt service on credit enhanced bonds.  For districts, other 
        than redevelopment districts for which the request for 
        certification was made after June 30, 1995, the pooling 
        percentage for purposes of the preceding sentence is 20 
        percent.  The revenue derived from tax increments for the 
        district that are expended on costs under section 469.176, 
        subdivision 4h, paragraph (b), may be deducted first before 
        calculating the percentages that must be expended within and 
        without the district.  
           (b) In the case of a housing district, a housing project, 
        as defined in section 469.174, subdivision 11, is an activity in 
        the district.  
           (c) All administrative expenses are for activities outside 
        of the district, except that if the only expenses for activities 
        outside of the district under this subdivision are for the 
        purposes described in paragraph (d), administrative expenses 
        will be considered as expenditures for activities in the 
        district. 
           (d) The authority may elect, in the tax increment financing 
        plan for the district, to increase by up to ten percentage 
        points the permitted amount of expenditures for activities 
        located outside the geographic area of the district under 
        paragraph (a).  As permitted by section 469.176, subdivision 4k, 
        the expenditures, including the permitted expenditures under 
        paragraph (a), need not be made within the geographic area of 
        the project.  Expenditures that meet the requirements of this 
        paragraph are legally permitted expenditures of the district, 
        notwithstanding section 469.176, subdivisions 4b, 4c, and 4j.  
        To qualify for the increase under this paragraph, the 
        expenditures must: 
           (1) be used exclusively to assist housing that meets the 
        requirement for a qualified low-income building, as that term is 
        used in section 42 of the Internal Revenue Code; 
           (2) not exceed the qualified basis of the housing, as 
        defined under section 42(c) of the Internal Revenue Code, less 
        the amount of any credit allowed under section 42 of the 
        Internal Revenue Code; and 
           (3) be used to: 
           (i) acquire and prepare the site of the housing; 
           (ii) acquire, construct, or rehabilitate the housing; or 
           (iii) make public improvements directly related to the 
        housing. 
           [EFFECTIVE DATE.] This section is effective for districts 
        for which the request for certification was made after April 30, 
        1990. 
           Sec. 6.  Minnesota Statutes 2002, section 469.1763, 
        subdivision 4, is amended to read: 
           Subd. 4.  [USE OF REVENUES FOR DECERTIFICATION.] (a) In 
        each year beginning with the sixth year following certification 
        of the district, if the applicable in-district percent of the 
        revenues derived from tax increments paid by properties in the 
        district that remain after exceeds the amount of expenditures 
        that have been made for costs permitted under subdivision 3, an 
        amount equal to the difference between the in-district percent 
        of the revenues derived from tax increments paid by properties 
        in the district and the amount of expenditures that have been 
        made for costs permitted under subdivision 3 must be used and 
        only used to pay or defease the following or be set aside to pay 
        the following: 
           (1) outstanding bonds, as defined in subdivision 3, 
        paragraphs (a), clause (2), and (b); 
           (2) contracts, as defined in subdivision 3, paragraph (a), 
        clauses (3) and (4); or 
           (3) credit enhanced bonds to which the revenues derived 
        from tax increments are pledged, but only to the extent that 
        revenues of the district for which the credit enhanced bonds 
        were issued are insufficient to pay the bonds and to the extent 
        that the increments from the applicable pooling percent share 
        for the district are insufficient. 
           (b) When the outstanding bonds have been defeased and when 
        sufficient money has been set aside to pay contractual 
        obligations as defined in subdivision 3, paragraph (a), clauses 
        (3) and (4), the district must be decertified and the pledge of 
        tax increment discharged. 
           Sec. 7.  Minnesota Statutes 2002, section 469.177, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
        after adoption of a tax increment financing plan, the auditor of 
        any county in which the district is situated shall, upon request 
        of the authority, certify the original net tax capacity of the 
        tax increment financing district and that portion of the 
        district overlying any subdistrict as described in the tax 
        increment financing plan and shall certify in each year 
        thereafter the amount by which the original net tax capacity has 
        increased or decreased as a result of a change in tax exempt 
        status of property within the district and any subdistrict, 
        reduction or enlargement of the district or changes pursuant to 
        subdivision 4.  
           (b) For districts approved under section 469.175, 
        subdivision 3, or parcels added to existing districts after May 
        1, 1988, if the classification under section 273.13 of property 
        located in a district changes to a classification that has a 
        different assessment ratio, the original net tax capacity of 
        that property must be redetermined at the time when its use is 
        changed as if the property had originally been classified in the 
        same class in which it is classified after its use is changed. 
           (c) The amount to be added to the original net tax capacity 
        of the district as a result of previously tax exempt real 
        property within the district becoming taxable equals the net tax 
        capacity of the real property as most recently assessed pursuant 
        to section 273.18 or, if that assessment was made more than one 
        year prior to the date of title transfer rendering the property 
        taxable, the net tax capacity assessed by the assessor at the 
        time of the transfer.  If improvements are made to tax exempt 
        property after certification of the district and before the 
        parcel becomes taxable, the assessor shall, at the request of 
        the authority, separately assess the estimated market value of 
        the improvements.  If the property becomes taxable, the county 
        auditor shall add to original net tax capacity, the net tax 
        capacity of the parcel, excluding the separately assessed 
        improvements.  If substantial taxable improvements were made to 
        a parcel after certification of the district and if the property 
        later becomes tax exempt, in whole or part, as a result of the 
        authority acquiring the property through foreclosure or exercise 
        of remedies under a lease or other revenue agreement or as a 
        result of tax forfeiture, the amount to be added to the original 
        net tax capacity of the district as a result of the property 
        again becoming taxable is the amount of the parcel's value that 
        was included in original net tax capacity when the parcel was 
        first certified.  The amount to be added to the original net tax 
        capacity of the district as a result of enlargements equals the 
        net tax capacity of the added real property as most recently 
        certified by the commissioner of revenue as of the date of 
        modification of the tax increment financing plan pursuant to 
        section 469.175, subdivision 4. 
           (d) For districts approved under section 469.175, 
        subdivision 3, or parcels added to existing districts after May 
        1, 1988, if the net tax capacity of a property increases because 
        the property no longer qualifies under the Minnesota 
        Agricultural Property Tax Law, section 273.111; the Minnesota 
        Open Space Property Tax Law, section 273.112; or the 
        Metropolitan Agricultural Preserves Act, chapter 473H, or 
        because platted, unimproved property is improved or three years 
        pass after approval of the plat under section 273.11, 
        subdivision 1, the increase in net tax capacity must be added to 
        the original net tax capacity.  
           (e) The amount to be subtracted from the original net tax 
        capacity of the district as a result of previously taxable real 
        property within the district becoming tax exempt, or a reduction 
        in the geographic area of the district, shall be the amount of 
        original net tax capacity initially attributed to the property 
        becoming tax exempt or being removed from the district.  If the 
        net tax capacity of property located within the tax increment 
        financing district is reduced by reason of a court-ordered 
        abatement, stipulation agreement, voluntary abatement made by 
        the assessor or auditor or by order of the commissioner of 
        revenue, the reduction shall be applied to the original net tax 
        capacity of the district when the property upon which the 
        abatement is made has not been improved since the date of 
        certification of the district and to the captured net tax 
        capacity of the district in each year thereafter when the 
        abatement relates to improvements made after the date of 
        certification.  The county auditor may specify reasonable form 
        and content of the request for certification of the authority 
        and any modification thereof pursuant to section 469.175, 
        subdivision 4.  
           (f) If a parcel of property contained a substandard 
        building that was demolished or removed and if the authority 
        elects to treat the parcel as occupied by a substandard building 
        under section 469.174, subdivision 10, paragraph (b), the 
        auditor shall certify the original net tax capacity of the 
        parcel using the greater of (1) the current net tax capacity of 
        the parcel, or (2) the estimated market value of the parcel for 
        the year in which the building was demolished or removed, but 
        applying the class rates for the current year. 
           (g) For a redevelopment district qualifying under section 
        469.174, subdivision 10, paragraph (a), clause (4), as a 
        qualified disaster area, the auditor shall certify the value of 
        the land as the original tax capacity for any parcel in the 
        district that contains a building that suffered substantial 
        damage as a result of the disaster or emergency. 
           [EFFECTIVE DATE.] This section is effective for districts 
        for which the request for certification is made after the day 
        following final enactment. 
           Sec. 8.  [469.1794] [DURATION EXTENSION TO OFFSET 
        DEFICITS.] 
           Subdivision 1.  [AUTHORITY.] Subject to the conditions and 
        limitations imposed by this section, an authority may, by 
        resolution, extend the duration limit under section 469.176, 
        subdivision 1b, 1c, 1e, or 1g, that applies to a preexisting 
        district by up to the maximum number of years permitted under 
        subdivision 5, plus any amount authorized by the commissioner of 
        revenue under subdivision 6. 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given. 
           (b) "Extended district" means a tax increment financing 
        district whose duration limit is extended under this section. 
           (c) "Preexisting district" has the meaning given in section 
        469.1792, subdivision 2. 
           (d) "Preexisting obligation" has the meaning given in 
        section 469.1792, subdivision 2. 
           (e) "Qualifying obligation" means: 
           (1) a preexisting obligation that is: 
           (i) a general obligation bond of the municipality; 
           (ii) a general obligation bond of the authority; 
           (iii) a revenue bond of the authority to which other 
        revenues or money of the authority in addition to tax increments 
        are pledged to pay; 
           (iv) an interfund loan, including an advance or payment 
        made by the municipality or authority after June 1, 2002, to pay 
        an obligation listed in items (i) to (iii); 
           (v) an obligation assumed by a developer before January 1, 
        2001, to repay a general obligation bond issued by a 
        municipality to fund cleanup and development activities, if the 
        developer assumed the obligation more than five years after the 
        issuance of the bonds; or 
           (2) a bond issued to refinance a preexisting obligation 
        under clause (1). 
           Subd. 3.  [PRECONDITIONS.] Before an authority may extend 
        the duration of district under this section, the following 
        conditions must be met with regard to the district: 
           (1) the original local tax rate under section 469.177, 
        subdivision 1a, does not apply under an election made under 
        section 469.1792, subdivision 3, or under other operation of 
        law; 
           (2) for a district in the metropolitan area or taconite tax 
        relief area, the fiscal disparities contribution is computed 
        under section 469.177, subdivision 3, paragraph (a); 
           (3) the municipality has transferred any available 
        increments in other districts to pay qualified obligations of 
        the district or other districts in the municipality under 
        section 469.1763, subdivision 6; and 
           (4) the authority finds that, taking into account all of 
        the increments that are available to pay qualifying obligations 
        for the district, the increments from the district will be 
        insufficient to pay the amount of qualifying obligations and 
        that the insufficiency is a result of (i) the changes in the 
        class rates and (ii) elimination of the state-determined general 
        education property tax levy under Laws 2001, First Special 
        Session chapter 5. 
           Subd. 4.  [NOTICE; HEARING; AND APPROVALS.] The authority 
        may extend the duration of a district under this section only 
        after the municipality has approved the extension after 
        providing public notice and holding a hearing in the manner 
        provided under section 469.175, subdivision 3. 
           Subd. 5.  [MAXIMUM EXTENSION.] (a) The maximum extension 
        for a district under this subdivision equals the lesser of: 
           (1) four years; or 
           (2) the tax reform percentage for the district, determined 
        under paragraph (b), multiplied by the remaining duration of the 
        district rounded to the nearest whole number.  Fractions in 
        excess of one-third are rounded up. 
           (b) The tax reform percentage for the district, as 
        estimated by the county auditor, equals: 
           (1)(i) the total taxes paid by the original tax capacity 
        for the district for taxes payable in 2001, minus 
           (ii) the average of the total taxes paid by the original 
        tax capacity for the district for taxes payable in 2002 and in 
        2003, divided by 
           (2) the total taxes paid by the original tax capacity for 
        the district for taxes payable in 2001. 
           (c) In the resolution approving the extension, the 
        municipality may elect to treat all preexisting obligations as 
        qualified obligations for purposes of this section.  If the 
        municipality makes an election under this paragraph, the maximum 
        duration is reduced by one-half of the amount otherwise 
        permitted under paragraph (a).  
           (d) The remaining duration of a district is the number of 
        calendar years, beginning after December 31, 2001, in which the 
        district may collect increment under its duration limit under 
        section 469.176, subdivision 1b, 1c, 1e, or 1g, or a special law 
        approved before January 1, 2002, as applicable. 
           (e) For purposes of this subdivision, "taxes" exclude taxes 
        levied against market value, rather than tax capacity, and the 
        state general tax under section 275.025. 
           Subd. 6.  [COMMISSIONER AUTHORITY.] (a) If the municipality 
        determines that the extension permitted under subdivision 5 will 
        not provide sufficient revenue to pay in full the amount of 
        qualifying obligations, the municipality may apply to the 
        commissioner of revenue for an additional duration extension.  
        The commissioner may authorize an extension of the duration of 
        the district of up to two years after determining that: 
           (1) the insufficiency of revenues to pay the qualifying 
        obligations, which will be offset by the additional extension of 
        the duration limit, result from (i) the changes in the class 
        rates and (ii) elimination of the state-determined general 
        education property tax levy under Laws 2001, First Special 
        Session chapter 5; 
           (2) the municipality has or is transferring all available 
        increments from other preexisting districts and after August 1, 
        2001, has not entered into new obligations or authorized new 
        spending that reduced the amount of those increments that are 
        available for transfer to pay qualifying obligations; and 
           (3) increases in increments over the term of the district 
        are unlikely to eliminate the insufficiency. 
           (b) The commissioner may: 
           (1) establish the form of and time for applications under 
        this subdivision; and 
           (2) require the municipality to provide the information 
        that the commissioner determines is necessary or useful in 
        evaluating the application. 
           (c) This subdivision does not apply to a district if the 
        authority has made an election under subdivision 5, paragraph 
        (c).  
           Subd. 7.  [LIMITS ON USE OF INCREMENTS.] (a) Tax increments 
        of an extended district may only be used to pay preexisting 
        obligations of the district and administrative expenses, 
        effective upon the final required approval of the extension 
        under this section.  All tax increments that are attributable to 
        an extension of the duration of a district under this section 
        must be used only to pay qualified obligations of the district.  
        If increments from a district subject to this subdivision are 
        pledged to pay preexisting obligations that are not qualified 
        obligations, increments received under the duration limit, 
        determined without regard to this section, must be used to pay 
        qualified obligations and preexisting obligations that are not 
        qualified obligations in proportion to their relative shares of 
        all payments due on all preexisting obligations. 
           (b) If the authority elects to extend the duration of a 
        district under this section and if increments from one or more 
        other districts are pledged to pay preexisting obligations of 
        the extended district, increments from all of the districts may 
        only be used to pay preexisting obligations and administrative 
        expenses. 
           Subd. 8.  [DECERTIFICATION.] An extended district must be 
        decertified at the end of the first calendar year when 
        sufficient increments have been received to pay the qualified 
        obligations of the extended district.  Any remaining unspent 
        increments must be distributed as excess increments under 
        section 469.176, subdivision 2, clause (4). 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment and applies to districts for which the 
        request for certification was made on, before, or after August 
        1, 1979, and before August 1, 2001. 
           Sec. 9.  Minnesota Statutes 2002, section 474A.061, 
        subdivision 1, as amended by Laws 2003, chapter 127, article 12, 
        section 22, is amended to read: 
           Subdivision 1.  [ALLOCATION APPLICATION.] (a) An issuer may 
        apply for an allocation under this section by submitting to the 
        department an application on forms provided by the department, 
        accompanied by (1) a preliminary resolution, (2) a statement of 
        bond counsel that the proposed issue of obligations requires an 
        allocation under this chapter and the Internal Revenue Code, (3) 
        the type of qualified bonds to be issued, (4) an application 
        deposit in the amount of one percent of the requested allocation 
        before the last Monday in July, or in the amount of two percent 
        of the requested allocation on or after the last Monday in July, 
        (5) a public purpose scoring worksheet for manufacturing project 
        and enterprise zone facility project applications, and (6) for 
        residential rental projects, a statement from the applicant or 
        bond counsel as to whether the project preserves existing 
        federally subsidized housing for residential rental project 
        applications and whether the project is restricted to persons 
        who are 55 years of age or older.  The issuer must pay the 
        application deposit by a check made payable to the department of 
        finance.  The Minnesota housing finance agency, the Minnesota 
        rural finance authority, and the Minnesota higher education 
        services office may apply for and receive an allocation under 
        this section without submitting an application deposit. 
           (b) An entitlement issuer may not apply for an allocation 
        from the public facilities pool unless it has either permanently 
        issued bonds equal to the amount of its entitlement allocation 
        for the current year plus any amount of bonding authority 
        carried forward from previous years or returned for reallocation 
        all of its unused entitlement allocation.  An entitlement issuer 
        may not apply for an allocation from the housing pool unless it 
        either has permanently issued bonds equal to any amount of 
        bonding authority carried forward from a previous year or has 
        returned for reallocation all of its unused entitlement 
        allocation any unused bonding authority carried forward from a 
        previous year.  For purposes of this subdivision, its 
        entitlement allocation includes an amount obtained under section 
        474A.04, subdivision 6.  This paragraph does not apply to an 
        application from the Minnesota housing finance agency for an 
        allocation under subdivision 2a for cities who choose to have 
        the agency issue bonds on their behalf.  
           (c) If an application is rejected under this section, the 
        commissioner must notify the applicant and return the 
        application deposit to the applicant within 30 days unless the 
        applicant requests in writing that the application be 
        resubmitted.  The granting of an allocation of bonding authority 
        under this section must be evidenced by a certificate of 
        allocation.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 10.  [CITY OF NEW HOPE; TAX INCREMENT FINANCING 
        DISTRICT.] 
           Subdivision 1.  [SPECIAL RULES.] (a) At the election of the 
        city, upon adoption of the tax increment financing plan for a 
        district or districts described in this section, the rules 
        provided under this section apply to each such district. 
           For purposes of this section, "district" means a 
        redevelopment or soils condition tax increment financing 
        district established by the city of New Hope or the economic 
        development authority of the city within the following area:  
        beginning at the intersection of Winnetka Avenue N. and the 
        westerly extension of 58th Avenue N., east on the westerly 
        extension of 58th Avenue N. to Sumter Avenue N., south on Sumter 
        Avenue N. to Bass Lake Road, east on Bass Lake Road to the city 
        boundaries of New Hope and Crystal, MN, south along that city 
        boundary to St. Raphael Drive, west on St. Raphael Drive to 
        Sumter Avenue N., south on Sumter Avenue N. to 53rd Avenue N., 
        west on 53rd Avenue N. to Winnetka Avenue N., north on Winnetka 
        Avenue N. to 55th Avenue N., west on 55th Avenue N. to Zealand 
        Avenue N., north on Zealand Avenue N. to Bass Lake Road, east on 
        Bass Lake Road to Yukon Avenue N., north on Yukon Avenue N. to 
        Meadow Lake Road E., east on Meadow Lake Road E. to the 
        intersection with the west property line of New Hope golf 
        course, south along the west property line of New Hope golf 
        course to Bass Lake Road, east on Bass Lake Road to Winnetka 
        Avenue N., north on Winnetka Avenue N. to the point of 
        beginning.  The total number of parcels that may be included 
        within all such redevelopment or soils condition tax increment 
        financing districts must not exceed 131 and the total acreage, 
        including roads, easements, and rights-of-way, must not exceed 
        130 acres. 
           (b) The five-year rule under Minnesota Statutes, section 
        469.1763, subdivision 3, applies as if the limit is nine years. 
           (c) The limitations on expenditure of increment outside of 
        the district under Minnesota Statutes, section 469.1763, 
        subdivision 2, apply as follows: 
           (1) administrative expenses are treated as expenditures for 
        activities within the district; 
           (2) the percentage of increments that may be spent on 
        activities outside of the district under Minnesota Statutes, 
        section 469.1763, subdivision 2, is increased by 15 percentage 
        points; 
           (3) increments spent outside of the district may only be 
        spent on costs, such as property acquisition and public 
        improvements, that are fairly apportioned to parcels on which 
        the ultimate use is planned for housing; and 
           (4) increments may only be expended on improvements within 
        the area identified in paragraph (a). 
           (d) The requirements for qualifying a redevelopment 
        district under Minnesota Statutes, section 469.174, subdivision 
        10, do not apply to the parcels identified as 08-118-21-22-0001, 
        08-118-21-33-0008, 08-118-21-33-0009, 08-118-21-33-0010, 
        08-118-21-33-0011, 08-118-21-33-0013, 08-118-21-33-0018, 
        08-118-21-33-0019, 08-118-21-33-0025, 08-118-21-33-0027, 
        08-118-21-33-0029, 08-118-21-33-0082, and 08-118-21-33-0087, 
        which are deemed substandard for the purpose of qualifying the 
        district as a redevelopment district.  
           Subd. 2.  [EXPIRATION.] (a) The exception under subdivision 
        1, paragraph (c), from the limitations of Minnesota Statutes, 
        section 469.1763, subdivision 2, expires 20 years after the 
        receipt of the first increment from a district for which the 
        city has elected that this section applies.  
           (b) The authority to approve tax increment financing plans 
        to establish a tax increment financing district subject to this 
        section expires on December 31, 2013.  
           Subd. 3.  [EFFECTIVE DATE.] This section is effective upon 
        approval by the governing bodies of the city of New Hope and 
        Hennepin county and upon compliance by the city with Minnesota 
        Statutes, section 645.021, subdivision 3. 
           Sec. 11.  [EFFECTIVE DATE.] 
           Unless specifically provided otherwise in that article, 
        Laws 2003, chapter 127, article 12, is effective the day 
        following the final enactment of Laws 2003, chapter 127. 

                                   ARTICLE 11 
                                 MISCELLANEOUS 
           Section 1.  Minnesota Statutes 2002, section 3.986, 
        subdivision 4, is amended to read: 
           Subd. 4.  [POLITICAL SUBDIVISION.] A "political 
        subdivision" is a school district, county, or home rule charter 
        or statutory city. 
           [EFFECTIVE DATE.] This section is effective July 1, 2003. 
           Sec. 2.  Minnesota Statutes 2002, section 16A.152, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CASH FLOW ACCOUNT ESTABLISHED.] (a) A cash 
        flow account is created in the general fund in the state 
        treasury.  Beginning July 1, 2003, the commissioner of finance 
        shall restrict part or all of the balance before reserves in the 
        general fund as may be necessary to fund the cash flow account, 
        up to $350,000,000. 
           (b) The Amounts restricted are transferred to in the cash 
        flow account and shall remain in the account until drawn down 
        and used to meet cash flow deficiencies resulting from uneven 
        distribution of revenue collections and required expenditures 
        during a fiscal year. 
           Sec. 3.  Minnesota Statutes 2002, section 16A.152, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [BUDGET RESERVE INCREASE.] On June 30 July 1, 
        2003, the commissioner of finance shall transfer 
        $3,900,000 $300,000,000 to the budget reserve account in the 
        general fund.  On June 30 July 1, 2004, the commissioner of 
        finance shall transfer $12,300,000 $296,000,000 to the budget 
        reserve account in the general fund.  On June 30, 2005, the 
        commissioner of finance shall transfer $12,000,000 to the budget 
        reserve account in the general fund.  The amounts necessary for 
        this purpose are appropriated from the general fund. 
           Sec. 4.  Minnesota Statutes 2002, section 16A.152, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] If on the basis 
        of a forecast of general fund revenues and expenditures, the 
        commissioner of finance determines that there will be a positive 
        unrestricted budgetary general fund balance at the close of the 
        biennium, the commissioner of finance must allocate money to the 
        budget reserve until the total amount in the account equals 
        $653,000,000 the following accounts and purposes in priority 
        order: 
           (1) the cash flow account established in subdivision 1 
        until that account reaches $350,000,000; and 
           (2) the budget reserve account established in subdivision 
        1a until that account reaches $653,000,000. 
           The amounts necessary to meet the requirements of this 
        section are appropriated from the general fund within two weeks 
        after the forecast is released. 
           Sec. 5.  Minnesota Statutes 2002, section 18B.07, 
        subdivision 2, as amended by Laws 2003, chapter 127, article 13, 
        section 1, is amended to read: 
           Subd. 2.  [PROHIBITED PESTICIDE USE.] (a) A person may not 
        use, store, handle, distribute, or dispose of a pesticide, 
        rinsate, pesticide container, or pesticide application equipment 
        in a manner: 
           (1) that is inconsistent with a label or labeling as 
        defined by FIFRA; 
           (2) that endangers humans, damages agricultural products, 
        food, livestock, fish, or wildlife; or 
           (3) that will cause unreasonable adverse effects on the 
        environment.  
           (b) A person may not direct a pesticide onto property 
        beyond the boundaries of the target site.  A person may not 
        apply a pesticide resulting in damage to adjacent property. 
           (c) A person may not directly apply a pesticide on a human 
        by overspray or target site spray, except when: 
           (1) the pesticide is intended for use on a human; 
           (2) the pesticide application is for mosquito control 
        operations; 
           (3) the pesticide application is for control of gypsy moth, 
        forest tent caterpillar, or other pest species, as determined by 
        the commissioner, and the pesticide used is a biological agent; 
        or 
           (4) the pesticide application is for a public health risk, 
        as determined by the commissioner of health, and the 
        commissioner of health, in consultation with the commissioner of 
        agriculture, determines that the application is warranted based 
        on the commissioner's balancing of the public health risk with 
        the risk that the pesticide application poses to the health of 
        the general population, with special attention to the health of 
        children. 
           (d) For pesticide applications under paragraph (c), clause 
        (2), the following conditions apply: 
           (1) no practicable and effective alternative method of 
        control exists; 
           (2) the pesticide is among the least toxic available for 
        control of the target pest; and 
           (3) notification to residents in the area to be treated is 
        provided at least 24 hours before application through direct 
        notification, posting daily on the treating organization's Web 
        site, if any, and by sending a broadcast e-mail to those persons 
        who request notification of such, of those areas to be treated 
        by adult mosquito control techniques during the next calendar 
        day.  For control operations related to human disease, notice 
        under this paragraph may be given less than 24 hours in advance. 
           (e) For pesticide applications under paragraph (c), clauses 
        (3) and (4), the following conditions apply: 
           (1) no practicable and effective alternative method of 
        control exists; 
           (2) the pesticide is among the least toxic available for 
        control of the target pest; and 
           (3) notification of residents in the area to be treated is 
        provided by direct notification and through publication in a 
        newspaper of general circulation within the affected area. 
           (f) For purposes of this subdivision, "direct notification" 
        may include mailings, public meetings, posted placards, 
        neighborhood newsletters, or other means of contact designed to 
        reach as many residents as possible. 
           (g) A person may not apply a pesticide in a manner so as to 
        expose a worker in an immediately adjacent, open field. 
           Sec. 6.  [270.30] [TAX PREPARATION SERVICES.] 
           Subdivision 1.  [SCOPE.] (a) This section applies to a 
        person who offers, provides, or facilitates the provision of 
        refund anticipation loans, as part of or in connection with the 
        provision of tax preparation services. 
           (b) This section does not apply to: 
           (1) a tax preparer who provides tax preparation services 
        for fewer than six clients in a calendar year; 
           (2) the provision by a person of tax preparation services 
        to a spouse, parent, grandparent, child, or sibling; and 
           (3) the provision of services by an employee for an 
        employer. 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given. 
           (b) "Client" means an individual for whom a tax preparer 
        performs or agrees to perform tax preparation services. 
           (c) "Person" means an individual, corporation, partnership, 
        limited liability company, association, trustee, or other legal 
        entity. 
           (d) "Refund anticipation loan" means a loan, whether 
        provided by the tax preparer or another entity such as a 
        financial institution, in anticipation of, and whose payment is 
        secured by, a client's federal or state income tax refund or 
        both. 
           (e) "Tax preparation services" means services provided for 
        a fee or other consideration to a client to: 
           (1) assist with preparing or filing state or federal 
        individual income tax returns; 
           (2) assume final responsibility for completed work on an 
        individual income tax return on which preliminary work has been 
        done by another; or 
           (3) offer or facilitate the provision of refund 
        anticipation loans.  
           (f) "Tax preparer" or "preparer" means a person providing 
        tax preparation services subject to this section. 
           Subd. 3.  [STANDARDS OF CONDUCT.] No tax preparer shall: 
           (1) without good cause fail to promptly, diligently, and 
        without unreasonable delay complete a client's tax return; 
           (2) obtain the signature of a client to a tax return or 
        authorizing document that contains blank spaces to be filled in 
        after it has been signed; 
           (3) fail to sign a client's tax return when payment for 
        services rendered has been made; 
           (4) fail or refuse to give a client a copy of any document 
        requiring the client's signature within a reasonable time after 
        the client signs the document; 
           (5) fail to retain for at least four years a copy of 
        individual income tax returns; 
           (6) fail to maintain a confidential relationship between 
        themselves and their clients or former clients; 
           (7) fail to take commercially reasonable measures to 
        safeguard a client's nonpublic personal information; 
           (8) make, authorize, publish, disseminate, circulate, or 
        cause to make, either directly or indirectly, any false, 
        deceptive, or misleading statement or representation relating to 
        or in connection with the offering or provision of tax 
        preparation services; 
           (9) require a client to enter into a loan arrangement in 
        order to complete a tax return; 
           (10) claim credits or deductions on a client's tax return 
        for which the tax preparer knows or reasonably should know the 
        taxpayer does not qualify; 
           (11) charge, offer to accept, or accept a fee based upon a 
        percentage of an anticipated refund for tax preparation 
        services; 
           (12) under any circumstances, withhold or fail to return to 
        a client a document provided by the client for use in preparing 
        the client's tax return. 
           Subd. 4.  [REQUIRED DISCLOSURES; REFUND ANTICIPATION 
        LOANS.] (a) If a tax preparer offers to make or facilitate a 
        refund anticipation loan to the client, the preparer must make 
        the disclosures in this subdivision.  The disclosures must be 
        made before or at the same time the preparer offers the refund 
        anticipation loan to the client. 
           (b) The tax preparer must provide to a client a written 
        notice on a single sheet of paper, separate from any other 
        document or writing, containing: 
           (1) a legend, centered at the top on the single sheet of 
        paper, in bold, capital letters, and in 28-point type stating 
        "NOTICE"; 
           (2) the following verbatim statements: 
           (i) "This a loan.  The annual percentage rate (APR), based 
        on the estimated payment period, is (fill in the estimated APR)."
           (ii) "Your refund will be used to repay the loan.  As a 
        result, the amount of your refund will be reduced by (fill in 
        appropriate dollar amount) for fees, interest, and other 
        charges." 
           (iii) "You can get your refund in about two weeks if you 
        file your return electronically and have the Internal Revenue 
        Service send your refund to your own bank account." and 
           (3) if the client is subject to additional interest when a 
        refund is delayed, the following verbatim statement must also be 
        included in the notice:  "If you choose to take this loan and 
        your refund is delayed, you may have to pay additional interest."
           (c) All required statements must be in capital and small 
        font type fonts, in a minimum of 14-point type, with at least a 
        double space between each line in the statement and four spaces 
        between each statement. 
           (d) The notice must be signed and dated by the tax preparer 
        and the client. 
           Subd. 5.  [ITEMIZED BILL REQUIRED.] A tax preparer must 
        provide an itemized statement of the charges for services, at 
        least separately stating the charges for: 
           (1) return preparation; 
           (2) electronic filing; and 
           (3) providing or facilitating a refund anticipation loan. 
           Subd. 6.  [ENFORCEMENT; PENALTIES.] The commissioner may 
        impose an administrative penalty of not more than $1,000 per 
        violation of subdivision 3, 4, or 5.  The commissioner may 
        terminate a tax preparer's authority to transmit returns 
        electronically to the state, if the commissioner determines the 
        tax preparer engaged in a pattern and practice of violating this 
        section.  Imposition of a penalty under this subdivision is 
        subject to the contested case procedure under chapter 14.  The 
        commissioner shall collect the penalty in the same manner as the 
        income tax. 
           Subd. 7.  [ENFORCEMENT; CIVIL ACTIONS.] (a) Any violation 
        of this section is an unfair, deceptive, and unlawful trade 
        practice within the meaning of section 8.31. 
           (b) A client may bring a civil action seeking redress for a 
        violation of this section in the conciliation or the district 
        court of the county in which unlawful action is alleged to have 
        been committed or where the respondent resides or has a 
        principal place of business. 
           (c) A district court finding for the plaintiff must award 
        actual damages, including incidental and consequential damages, 
        reasonable attorney fees, court costs, and any other equitable 
        relief as the court considers appropriate. 
           Subd. 8.  [EXEMPTIONS; ENFORCEMENT PROVISIONS.] The 
        provisions of subdivisions 6 and 7 do not apply to: 
           (1) an attorney admitted to practice under section 481.01; 
           (2) a certified public accountant holding a certificate 
        under section 326A.04 or a person issued a permit to practice 
        under section 326A.05; 
           (3) a person designated as a registered accounting 
        practitioner under Minnesota Rules, part 1105.6600, or a 
        registered accounting practitioner firm issued a permit under 
        Minnesota Rules, part 1105.7100; 
           (4) an enrolled agent who has passed the special enrollment 
        examination administered by the Internal Revenue Service; and 
           (5) any fiduciary, or the regular employees of a fiduciary, 
        while acting on behalf of the fiduciary estate, the testator, 
        trustor, grantor, or beneficiaries of them. 
           Sec. 7.  Minnesota Statutes 2002, section 270A.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
        state agency, as defined by section 14.02, subdivision 2, the 
        regents of the University of Minnesota, any district court of 
        the state, any county, any statutory or home rule charter city 
        presenting a claim for a municipal hospital or a public library 
        or a municipal ambulance service, a hospital district, a private 
        nonprofit hospital that leases its building from the county in 
        which it is located, any public agency responsible for child 
        support enforcement, any public agency responsible for the 
        collection of court-ordered restitution, and any public agency 
        established by general or special law that is responsible for 
        the administration of a low-income housing program.  A county 
        may act as a claimant agency on behalf of an ambulance service 
        licensed under chapter 144E if the ambulance service's primary 
        service area is located at least in part within the county, but 
        more than one county may not act as a claimant agency for a 
        licensed ambulance service with respect to the same debt. 
           Sec. 8.  Minnesota Statutes 2002, section 270A.07, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NOTIFICATION REQUIREMENT.] (a) Any 
        claimant agency, seeking collection of a debt through setoff 
        against a refund due, shall submit to the commissioner 
        information indicating the amount of each debt and information 
        identifying the debtor, as required by section 270A.04, 
        subdivision 3.  
           (b) For each setoff of a debt against a refund due, the 
        commissioner shall charge a fee of $10.  The proceeds of fees 
        shall be allocated by depositing $2.55 of each $10 fee collected 
        into a department of revenue recapture revolving fund and 
        depositing the remaining balance into the general fund.  The 
        sums deposited into the revolving fund are appropriated to the 
        commissioner for the purpose of administering the Revenue 
        Recapture Act. 
           (c) For each debt for which a county acts as claimant 
        agency on behalf of a licensed ambulance service, the county may 
        charge the ambulance service a fee not to exceed the cost of 
        administering the claim. 
           (d) The claimant agency shall notify the commissioner when 
        a debt has been satisfied or reduced by at least $200 within 30 
        days after satisfaction or reduction. 
           Sec. 9.  Minnesota Statutes 2002, section 270A.07, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SETOFF PROCEDURES.] (a) The commissioner, upon 
        receipt of notification, shall initiate procedures to detect any 
        refunds otherwise payable to the debtor.  When the commissioner 
        determines that a refund is due to a debtor whose debt was 
        submitted by a claimant agency, the commissioner shall first 
        deduct the fee in subdivision 1, paragraph (b), and then remit 
        the refund or the amount claimed, whichever is less, to the 
        agency.  In transferring or remitting moneys to the claimant 
        agency, the commissioner shall provide information indicating 
        the amount applied against each debtor's obligation and the 
        debtor's address listed on the tax return.  
           (b) The commissioner shall remit to the debtor the amount 
        of any refund due in excess of the debt submitted for setoff by 
        the claimant agency.  Notice of the amount setoff and address of 
        the claimant agency shall accompany any disbursement to the 
        debtor of the balance of a refund, or shall be sent to the 
        debtor at the time of setoff if the entire refund is set off.  
        The notice shall also advise the debtor of the right to contest 
        the validity of the claim, other than a claim based upon child 
        support under section 518.171, 518.54, 518.551, or chapter 518C 
        at a hearing, subject to the restrictions in this paragraph.  
        The debtor must assert this right by written request to the 
        claimant agency, which request the claimant agency must receive 
        within 45 days of the date of the notice.  This right does not 
        apply to (1) issues relating to the validity of the claim that 
        have been previously raised at a hearing under this section or 
        section 270A.09; (2) issues relating to the validity of the 
        claim that were not timely raised by the debtor under section 
        270A.08, subdivision 2; (3) issues relating to the validity of 
        the claim that have been previously raised at a hearing 
        conducted under rules promulgated by the United States 
        Department of Housing and Urban Development or any public agency 
        that is responsible for the administration of a low-income 
        housing program, or that were not timely raised by the debtor 
        under those rules; or (4) issues relating to the validity of the 
        claim for which a hearing is discretionary under section 
        270A.09.  The notice shall include an explanation of the right 
        of the spouse who does not owe the debt to request the claimant 
        agency to repay the spouse's portion of a joint refund. 
           Sec. 10.  Minnesota Statutes 2002, section 273.1341, as 
        added by Laws 2003, chapter 127, article 11, section 2, is 
        amended to read: 
           273.1341 [TACONITE ASSISTANCE AREA.] 
           A "taconite assistance area" means the geographic area that 
        falls within the boundaries of a school district that contains: 
           (1) 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) 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 
        payable in 2004 and thereafter. 
           Sec. 11.  Minnesota Statutes 2002, section 276A.01, 
        subdivision 2, is amended to read: 
           Subd. 2.  [AREA.] "Area" means the territory included 
        within all tax relief taconite assistance areas defined in 
        section 273.134, paragraph (b) 273.1341. 
           Sec. 12.  Minnesota Statutes 2002, section 289A.08, 
        subdivision 16, as amended by Laws 2003, First Special Session 
        chapter 1, article 2, section 81, is amended to read: 
           Subd. 16.  [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 
        FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 
        preparer," as defined in section 289A.60, subdivision 13, 
        paragraph (g), who prepared more than 500 Minnesota individual 
        income tax returns for the prior calendar year must file all 
        Minnesota individual income tax returns prepared for the current 
        calendar year by electronic means. 
           (b) For tax returns prepared for the tax year beginning in 
        2001, the "500" in paragraph (a) is reduced to 250. 
           (c) For tax returns prepared for tax years beginning after 
        December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
           (d) Paragraph (a) does not apply to a return if the 
        taxpayer has indicated on the return that the taxpayer did not 
        want the return filed by electronic means. 
           (e) For each return that is not filed electronically by a 
        tax refund or return preparer under this subdivision, including 
        returns filed under paragraph (d), a paper filing fee of $5 is 
        imposed upon the preparer.  The fee is collected from the 
        preparer in the same manner as income tax.  The fee does not 
        apply to returns that the commissioner requires to be filed in 
        paper form. 
           [EFFECTIVE DATE.] This section is effective for returns 
        filed for tax years beginning after December 31, 2002. 
           Sec. 13.  Minnesota Statutes 2002, 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 charitable contribution deduction under section 170 
        of the Internal Revenue Code to the extent that the deduction 
        exceeds 1.3 1.0 percent of adjusted gross income, as defined in 
        section 62 of the Internal Revenue Code; 
           (ii) the medical expense deduction; 
           (iii) the casualty, theft, and disaster loss deduction; and 
           (iv) the impairment-related work expenses of a disabled 
        person; 
           (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); 
           (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); and 
           (6) the amount of addition required by section 290.01, 
        subdivision 19a, clause (7); 
           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, clause (12). 
           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. 
           [EFFECTIVE DATE.] This section is effective for taxable 
        years beginning after December 31, 2002. 
           Sec. 14.  Minnesota Statutes 2002, section 298.018, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WITHIN THE TACONITE TAX RELIEF ASSISTANCE 
        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 assistance area defined in 
        section 273.134, paragraph (b) 273.1341, 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. 15.  Minnesota Statutes 2002, section 298.018, 
        subdivision 2, is amended to read: 
           Subd. 2.  [OUTSIDE THE TACONITE TAX RELIEF ASSISTANCE 
        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 assistance area defined in 
        section 273.134, paragraph (b) 273.1341, shall be deposited in 
        the general fund. 
           Sec. 16.  Minnesota Statutes 2002, 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 taconite assistance area as defined in 
        section 273.134, paragraph (b) 273.1341.  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 taconite assistance 
        area as defined in section 273.134, paragraph (b) 273.1341.  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. 17.  Minnesota Statutes 2002, section 298.22, 
        subdivision 8, is amended 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 taconite assistance area as defined in section 273.134, 
        paragraph (b) 273.1341, 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. 18.  Minnesota Statutes 2002, section 298.2211, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PURPOSE; GRANT OF AUTHORITY.] In order to 
        accomplish the legislative purposes specified in sections 
        469.142 to 469.165 and chapter 462C, within tax relief areas the 
        taconite assistance area as defined in section 273.134 273.1341, 
        the commissioner of iron range resources and rehabilitation may 
        exercise the following powers:  (1) all powers conferred upon a 
        rural development financing authority under sections 469.142 to 
        469.149; (2) all powers conferred upon a city under chapter 
        462C; (3) all powers conferred upon a municipality or a 
        redevelopment agency under sections 469.152 to 469.165; (4) all 
        powers provided by sections 469.142 to 469.151 to further any of 
        the purposes and objectives of chapter 462C and sections 469.152 
        to 469.165; and (5) all powers conferred upon a municipality or 
        an authority under sections 469.174 to 469.177, 469.178, except 
        subdivision 2 thereof, and 469.179, subject to compliance with 
        the provisions of section 469.175, subdivisions 1, 2, and 3; 
        provided that any tax increments derived by the commissioner 
        from the exercise of this authority may be used only to finance 
        or pay premiums or fees for insurance, letters of credit, or 
        other contracts guaranteeing the payment when due of net rentals 
        under a project lease or the payment of principal and interest 
        due on or repurchase of bonds issued to finance a project or 
        program, to accumulate and maintain reserves securing the 
        payment when due on bonds issued to finance a project or 
        program, or to provide an interest rate reduction program 
        pursuant to section 469.012, subdivision 7.  Tax increments and 
        earnings thereon remaining in any bond reserve account after 
        payment or discharge of any bonds secured thereby shall be used 
        within one year thereafter in furtherance of this section or 
        returned to the county auditor of the county in which the tax 
        increment financing district is located.  If returned to the 
        county auditor, the county auditor shall immediately allocate 
        the amount among all government units which would have shared 
        therein had the amount been received as part of the other ad 
        valorem taxes on property in the district most recently paid, in 
        the same proportions as other taxes were distributed, and shall 
        immediately distribute it to the government units in accordance 
        with the allocation. 
           Sec. 19.  Minnesota Statutes 2002, 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 taconite assistance area defined in 
        section 273.134, paragraph (b) 273.1341. 
           Sec. 20.  Minnesota Statutes 2002, 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 taconite assistance area 
        defined in section 273.134, paragraph (b) 273.1341, and as 
        otherwise provided in this section. 
           Sec. 21.  Minnesota Statutes 2002, 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 assistance area defined in 
        section 273.134, paragraph (b) 273.1341.  The committee is 
        subject to section 15.059. 
           Sec. 22.  Minnesota Statutes 2002, section 298.2214, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ADVISORY FUNCTION.] The committee shall advise 
        the commissioner regarding development of a contract with the 
        state university system.  The contract would require the system 
        to provide courses within the taconite tax relief assistance 
        area defined in section 273.1341. 
           Sec. 23.  Minnesota Statutes 2002, 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 the taconite 
        assistance area defined in section 273.134, paragraph 
        (b) 273.1341, 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 the taconite assistance area defined 
        in section 273.134, paragraph (b) 273.1341; 
           (d) monitoring of mineral industry related health problems 
        among mining employees. 
           Sec. 24.  Minnesota Statutes 2002, 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 the taconite assistance area defined in section 273.134, 
        paragraph (b) 273.1341.  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. 25.  Minnesota Statutes 2002, section 298.28, 
        subdivision 11, is amended to read: 
           Subd. 11.  [REMAINDER.] (a) The proceeds of the tax imposed 
        by section 298.24 which remain after the distributions and 
        payments in subdivisions 2 to 10a, as certified by the 
        commissioner of revenue, and paragraphs (b), (c), (d), and (e) 
        have been made, together with interest earned on all money 
        distributed under this section prior to distribution, shall be 
        divided between the taconite environmental protection fund 
        created in section 298.223 and the northeast Minnesota economic 
        protection trust fund created in section 298.292 as follows:  
        Two-thirds to the taconite environmental protection fund and 
        one-third to the northeast Minnesota economic protection trust 
        fund.  The proceeds shall be placed in the respective special 
        accounts. 
           (b) There shall be distributed to each city, town, and 
        county the amount that it received under section 294.26 in 
        calendar year 1977; provided, however, that the amount 
        distributed in 1981 to the unorganized territory number 2 of 
        Lake county and the town of Beaver Bay based on the 
        between-terminal trackage of Erie Mining Company will be 
        distributed in 1982 and subsequent years to the unorganized 
        territory number 2 of Lake county and the towns of Beaver Bay 
        and Stony River based on the miles of track of Erie Mining 
        Company in each taxing district. 
           (c) There shall be distributed to the iron range resources 
        and rehabilitation board the amounts it received in 1977 under 
        section 298.22.  The amount distributed under this paragraph 
        shall be expended within or for the benefit of the tax relief 
        taconite assistance area defined in section 273.134 273.1341. 
           (d) There shall be distributed to each school district 62 
        percent of the amount that it received under section 294.26 in 
        calendar year 1977. 
           (e) In 2003 only, $100,000 must be distributed to a 
        township located in a taconite tax relief area as defined in 
        section 273.134, paragraph (a), that received $119,259 of 
        homestead and agricultural credit aid and $182,014 in local 
        government aid in 2001. 
           Sec. 26.  Minnesota Statutes 2002, 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 taconite assistance area defined 
        in section 273.134, paragraph (b) 273.1341. 
           Sec. 27.  Minnesota Statutes 2002, 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 the 
        taconite assistance area as defined in section 273.134, 
        paragraph (b) 273.1341.  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. 28.  Minnesota Statutes 2002, 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 taconite 
        assistance area defined in section 273.134, paragraph 
        (b) 273.1341.  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. 29.  Minnesota Statutes 2002, section 429.101, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORDINANCES.] (a) In addition to any other 
        method authorized by law or charter, the governing body of any 
        municipality may provide for the collection of unpaid special 
        charges for all or any part of the cost of: 
           (1) snow, ice, or rubbish removal from sidewalks,; 
           (2) weed elimination from streets or private property,; 
           (3) removal or elimination of public health or safety 
        hazards from private property, excluding any structure included 
        under the provisions of sections 463.15 to 463.26,; 
           (4) installation or repair of water service lines, street 
        sprinkling or other dust treatment of streets,; 
           (5) the trimming and care of trees and the removal of 
        unsound trees from any street,; 
           (6) the treatment and removal of insect infested or 
        diseased trees on private property, the repair of sidewalks and 
        alleys,; 
           (7) the operation of a street lighting system, or; 
           (8) the operation and maintenance of a fire protection or a 
        pedestrian skyway system,; or 
           (9) reinspections which find noncompliance after the due 
        date for compliance with an order to correct a municipal housing 
        maintenance code violation; 
        as a special assessment against the property benefited.  
           (b) The council may by ordinance adopt regulations 
        consistent with this section to make this authority effective, 
        including, at the option of the council, provisions for placing 
        primary responsibility upon the property owner or occupant to do 
        the work personally(except in the case of street sprinkling or 
        other dust treatment, alley repair, tree trimming, care, and 
        removal or the operation of a street lighting system) upon 
        notice before the work is undertaken, and for collection from 
        the property owner or other person served of the charges when 
        due before unpaid charges are made a special assessment.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 30.  Minnesota Statutes 2002, section 473.704, 
        subdivision 17, as amended by Laws 2003, chapter 127, article 
        13, section 4, is amended to read: 
           Subd. 17.  [ENTRY TO PROPERTY.] (a) Members of the 
        commission, its officers, and employees, while on the business 
        of the commission, may enter upon any property within or outside 
        the district at reasonable times to determine the need for 
        control programs.  They may take all necessary and proper steps 
        for the control programs on property within the district as the 
        director of the commission may designate.  Subject to the 
        paramount control of the county and state authorities, 
        commission members and officers and employees of the commission 
        may enter upon any property and clean up any stagnant pool of 
        water, the shores of lakes and streams, and other breeding 
        places for mosquitoes within the district.  The commission may 
        apply insecticides approved by the director to any area within 
        or outside the district that is found to be a breeding place for 
        mosquitoes.  The commission shall give reasonable notification 
        to the governing body of the local unit of government prior to 
        applying insecticides outside of the district on land located 
        within the jurisdiction of the local unit of government.  The 
        commission shall not enter upon private property if the owner 
        objects except (1) to monitor for disease-bearing mosquitoes, 
        ticks, or black gnats, or (2) for control of mosquito species 
        capable of carrying a human disease in the local area of a human 
        disease outbreak regardless of whether there has been an 
        occurrence of the disease in a human being.  The commission 
        shall make a reasonable attempt to contact an objecting owner 
        before entering on the owner's private property. 
           (b) The commissioner of natural resources must approve 
        mosquito control plans or make modifications as the commissioner 
        of natural resources deems necessary for the protection of 
        public water, wild animals, and natural resources before control 
        operations are started on state lands administered by the 
        commissioner of natural resources. 
           Sec. 31.  Laws 1998, chapter 389, article 16, section 35, 
        subdivision 1, as amended by Laws 2001, First Special Session 
        chapter 5, article 20, section 19, is amended to read: 
           Subdivision 1.  [BAT STUDY.] $100,000 is appropriated from 
        the general fund for fiscal year 1999 to the legislative 
        coordinating commission to study alternative methods of taxing 
        business.  The appropriations under this section and under Laws 
        1997, chapter 231, article 5, section 18, subdivision 3, are 
        available in fiscal years 2000 and 2001.  Any portion of this 
        appropriation that cancels in 2001 is appropriated in 2002 and 
        is available until June 30, 2003.  The date for completion of 
        this study is extended through December 31, 2004, and the 
        portion of the appropriation encumbered by the contracts between 
        the legislative coordinating commission and the department of 
        revenue and between the department of revenue and the University 
        of Minnesota may be spent during the 2004-2005 biennium to pay 
        obligations under the contracts. 
           Sec. 32.  Laws 2001, First Special Session chapter 5, 
        article 20, section 22, is amended to read: 
           Sec. 22.  [BUDGET RESERVE INCREASE.] 
           The commissioner of finance shall transfer the amount 
        necessary to increase the budget reserve account in the general 
        fund to $653,000,000 on July 1, 2001.  On July 1, 2003, the 
        commissioner of finance shall transfer $31,000,000 to the budget 
        reserve account in the general fund.  The amounts necessary for 
        this purpose are appropriated from the general fund. 
           Sec. 33.  [TRANSFER OF ENDOWMENT FUNDS.] 
           On July 1, 2003, the commissioner of finance shall transfer 
        the tobacco use prevention and local public health endowment 
        fund and the medical education endowment fund to the general 
        fund. 
           Sec. 34.  [BUDGET RESERVE ADJUSTMENT.] 
           If, prior to July 1, 2003, on the basis of the February 
        2003 forecast and revenue and expenditure measures enacted into 
        law in the 2003 regular and special legislative sessions, the 
        commissioner of finance determines there will be a negative 
        unrestricted budgetary balance in the general fund for the 
        biennium ending June 30, 2005, the commissioner shall reduce the 
        July 1, 2004, appropriation to the budget reserve account in 
        Minnesota Statutes, section 16A.152, subdivision 1b, by the 
        amount necessary to balance revenues and expenditures in the 
        biennium ending June 30, 2005. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 35.  [TEMPORARY STATE FISCAL RELIEF.] 
           Any temporary state fiscal relief received under Title VI 
        of the Jobs Growth and Tax Relief Reconciliation Act of 2003 
        must be deposited in the state treasury and credited to the 
        general fund. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 36.  [APPROPRIATION.] 
           (a) $100,000 in fiscal year 2004 and $100,000 in fiscal 
        year 2005 are appropriated 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 does not become a part of the base.
           (b) "Taxpayer assistance services" mean 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. 37.  [APPROPRIATION; COST OF ADMINISTRATION.] 
           $200,000 in fiscal year 2004 is appropriated from the 
        general fund to the commissioner of revenue for the cost of 
        administering tax law changes enacted in 2003. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Presented to the governor May 30, 2003 
           Signed by the governor June 8, 2003, 7:00 p.m.

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