1.1 	A bill for an act
1.2 	relating to taxation; exempting certain cities from sales tax on their purchases;
1.3 	amending Minnesota Statutes 2008, section 297A.70, subdivision 2.
1.4 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.5 	Section 1. Minnesota Statutes 2008, section 297A.70, subdivision 2, is amended to 
1.6 	read:
1.7 		Subd. 2.Sales to government. (a) All sales, except those listed in paragraph (b), 
1.8 	to the following governments and political subdivisions, or to the listed agencies or 
1.9 	instrumentalities of governments and political subdivisions, are exempt:
1.10 	(1) the United States and its agencies and instrumentalities;
1.11 	(2) school districts, the University of Minnesota, state universities, community 
1.12 	colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts 
1.13 	Education, and an instrumentality of a political subdivision that is accredited as an 
1.14 	optional/special function school by the North Central Association of Colleges and Schools;
1.15 	(3) hospitals and nursing homes owned and operated by political subdivisions of 
1.16 	the state of tangible personal property and taxable services used at or by hospitals and 
1.17 	nursing homes;
1.18 	(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip 
1.19 	operations provided for in section 473.4051; 
1.20 	(5) other states or political subdivisions of other states, if the sale would be exempt 
1.21 	from taxation if it occurred in that state; and
1.22 	(6) sales to public libraries, public library systems, multicounty, multitype library 
1.23 	systems as defined in section 134.001, county law libraries under chapter 134A, state 
2.1 	agency libraries, the state library under section 480.09, and the Legislative Reference 
2.2 	Library; and
2.3 	(7) eligible cities, as determined under this clause. A city that received local 
2.4 	government aid under chapter 477A in 1992 is eligible for exemption in any calendar 
2.5 	year that the commissioner of revenue certifies under section 477A.014 that the city will 
2.6 	receive no local government aid under section 477A.013 for that year. A city is also 
2.7 	eligible if it notifies the commissioner of revenue by June 1 of the year prior to the aid 
2.8 	distribution year that it chooses to forgo any distribution under section 477A.013 for that 
2.9 	aid distribution year. Aid amounts forgone under this clause must be redistributed among 
2.10 	other cities that qualify for aid under section 477A.013. 
2.11 	(b) This exemption does not apply to the sales of the following products and services:
2.12 	(1) building, construction, or reconstruction materials purchased by a contractor 
2.13 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
2.14 	guaranteed maximum price covering both labor and materials for use in the construction, 
2.15 	alteration, or repair of a building or facility;
2.16 	(2) construction materials purchased by tax exempt entities or their contractors to 
2.17 	be used in constructing buildings or facilities which will not be used principally by the 
2.18 	tax exempt entities;
2.19 	(3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11, 
2.20 	except for leases entered into by the United States or its agencies or instrumentalities; or 
2.21 	(4) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause 
2.22 	(2), and prepared food, candy, and soft drinks, except for lodging, prepared food, candy, 
2.23 	and soft drinks purchased directly by the United States or its agencies or instrumentalities. 
2.24 	(c) As used in this subdivision, "school districts" means public school entities and 
2.25 	districts of every kind and nature organized under the laws of the state of Minnesota, and 
2.26 	any instrumentality of a school district, as defined in section 471.59. 

2.27 	EFFECTIVE DATE. This section is effective for sales after December 31, 2009.