1.1 	A bill for an act
1.2 	relating to local government aid; changing city
1.3 	formula aid; amending Minnesota Statutes 2004,
1.4 	sections 477A.013, subdivision 8; 477A.03, subdivision
1.5 	2a.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 477A.013,
1.8 	subdivision 8, is amended to read:
1.9 		Subd. 8.City formula aid.  In calendar year 2004 and
1.10 	subsequent years, the formula aid for a city is equal to the
1.11 	need increase percentage multiplied by the difference between
1.12 	(1) the city's revenue need multiplied by its population, and
1.13 	(2) the ~~sum of the~~ city's net tax capacity multiplied by the tax
1.14 	effort rate~~, and the taconite aids under sections 298.28 and~~
1.15 	~~298.282, multiplied by the following percentages:~~
1.16 	~~(i) zero percent for aids payable in 2004;~~
1.17 	~~(ii) 25 percent for aids payable in 2005;~~
1.18 	~~(iii) 50 percent for aids payable in 2006;~~
1.19 	~~(iv) 75 percent for aids payable in 2007; and~~ 
1.20 	~~(v) 100 percent for aids payable in 2008 and thereafter~~.
1.21 	No city may have a formula aid amount less than zero.  The need
1.22 	increase percentage must be the same for all cities.
1.23 	The applicable need increase percentage must be calculated
1.24 	by the Department of Revenue so that the total of the aid under
1.25 	subdivision 9 equals the total amount available for aid under
2.1 	section 477A.03 after the subtraction under section 477A.014,
2.2 	subdivisions 4 and 5.
2.3 	
EFFECTIVE DATE. This section is effective beginning with
2.4 	aids payable in 2005 and thereafter.  For aids payable in 2005
2.5 	only, the inclusion of the taconite aids in the formula used for
2.6 	calculating the aid certifications shall be treated as an error
2.7 	in the factors used to calculate a taxing authority's aid amount
2.8 	and shall be corrected as provided for in section 477A.014,
2.9 	subdivision 3, with the money needed for the additional aid
2.10 	coming from the general fund.

2.11 	Sec. 2. Minnesota Statutes 2004, section 477A.03,
2.12 	subdivision 2a, is amended to read:
2.13 		Subd. 2a.Cities.  For aids payable in 2004, the total
2.14 	aids paid under section 477A.013, subdivision 9, are limited to
2.15 	$429,000,000.  For aids payable in 2005 ~~and thereafter~~, the
2.16 	total aids paid under section 477A.013, subdivision 9, are
2.17 	increased to $437,052,000. For aids payable in 2006, the total
2.18 	aids paid under section 477A.013, subdivision 9, are increased
2.19 	to $441,393,069.  For aids payable in 2007, the total aids paid
2.20 	under section 477A.013, subdivision 9, are increased to
2.21 	$443,563,603.  For aids payable in 2008 and thereafter, the
2.22 	total aids paid under section 477A.013, subdivision 9, are
2.23 	increased to $445,734,137.
2.24 	
EFFECTIVE DATE. This section is effective beginning with
2.25 	aids payable in 2006 and thereafter.

2.26 	Sec. 3. TRANSFER.
 2.27 	$2,170,538 is transferred from the budget reserve in the
2.28 	general fund under Minnesota Statutes, section 16A.152,
2.29 	subdivision 1a, to the general fund in fiscal year 2006.
2.30 	$4,341,069 is transferred from the budget reserve in the general
2.31 	fund under Minnesota Statutes, section 16A.152, subdivision 1a,
2.32 	to the general fund in fiscal year 2007.

2.33 	EFFECTIVE DATE. This section is effective the day
2.34 	following final enactment.