1.1                          A bill for an act
  1.2             relating to the operation and financing of state and 
  1.3             local government; proposing an amendment to the 
  1.4             Minnesota Constitution to limit local property taxes 
  1.5             for the funding of primary and secondary education; 
  1.6             proposing an amendment to the Minnesota Constitution 
  1.7             to establish a property taxpayers' trust fund to 
  1.8             receive certain sales tax proceeds; changing property 
  1.9             tax class rates; adjusting the computation and payment 
  1.10            of the homestead and agricultural credit aid and other 
  1.11            aids to local units of government; revising the 
  1.12            computation of the property tax refund and renters 
  1.13            credit; extending the targeting credit; imposing the 
  1.14            sales tax on new clothing and providing sales tax 
  1.15            exemptions; adjusting the amounts of certain education 
  1.16            levies; imposing a business activity tax; making 
  1.17            technical and administrative changes in income, 
  1.18            property, sales and use, MinnesotaCare, motor fuels 
  1.19            taxes, the dry cleaning facility use fee, and the 
  1.20            solid waste generation assessment; providing credits 
  1.21            against the income tax; authorizing imposition of 
  1.22            sales taxes in the cities of Little Falls and 
  1.23            Hermantown; extending the use of the proceeds of the 
  1.24            sales tax in the city of Mankato and Cook county; 
  1.25            providing a five-week redemption period for certain 
  1.26            abandoned properties; allowing certain counties to 
  1.27            abate taxes; authorizing the issuance of obligations; 
  1.28            authorizing levies by Carlton county and the Valley 
  1.29            Branch watershed district; providing for establishment 
  1.30            of the Virginia area ambulance district; modifying 
  1.31            requirements and limitations that apply to tax 
  1.32            increment financing districts; providing for 
  1.33            establishment of special service districts and 
  1.34            multiunit residential improvement areas; extending the 
  1.35            duration of certain border city enterprise zones; 
  1.36            authorizing the cities of Minneapolis, Duluth, and 
  1.37            Little Canada to establish special service districts; 
  1.38            authorizing the city of Duluth to establish a housing 
  1.39            replacement project; authorizing the establishment of 
  1.40            distressed rental property districts in the city of 
  1.41            Brooklyn Park; authorizing variations from general law 
  1.42            for tax increment financing districts in Breckenridge, 
  1.43            East Grand Forks, Mountain Iron, South St. Paul, and 
  1.44            Woodbury; providing an enterprise zone allocation to 
  1.45            the city of Duluth; modifying the distribution of 
  1.46            taconite production tax proceeds; authorizing the iron 
  2.1             range resources and rehabilitation board to provide 
  2.2             certain grants and loans; establishing a tax base 
  2.3             sharing mechanism in the taconite tax relief area; 
  2.4             removing certain obsolete provisions from the tax law; 
  2.5             providing for the effect of certain bond covenants; 
  2.6             adjusting the tax base for the tax imposed on 
  2.7             pari-mutuel pools and modifying the treatment of 
  2.8             unredeemed pari-mutuel tickets; providing for a refund 
  2.9             of taxes on unplayed pull-tabs and tipboards; 
  2.10            authorizing certain expenditures of gambling proceeds; 
  2.11            increasing the tax on motor fuels and providing for 
  2.12            distribution of the proceeds of the tax increase; 
  2.13            adjusting the base value of motor vehicles subject to 
  2.14            the motor vehicle registration tax; authorizing the 
  2.15            metropolitan council to impose a sales and use tax to 
  2.16            finance transit in the metropolitan area; providing 
  2.17            penalties; appropriating money; amending Minnesota 
  2.18            Statutes 1994, sections 10A.31, subdivision 3a; 
  2.19            103E.611, subdivision 7; 124.2716, subdivision 3; 
  2.20            124.2727, subdivision 6b; 161.082, subdivision 2a; 
  2.21            162.07, subdivisions 1 and 3; 162.081, subdivision 4; 
  2.22            165.08, subdivision 5; 239.761, subdivision 5; 240.15, 
  2.23            subdivisions 1 and 5; 256.025, subdivision 4; 270.067, 
  2.24            subdivision 2; 270.07, subdivision 1; 270.102, 
  2.25            subdivisions 1, 2, and 3; 270.70, subdivision 2; 
  2.26            270A.03, subdivision 2; 270B.02, by adding a 
  2.27            subdivision; 272.01, subdivision 2; 273.02, 
  2.28            subdivision 3; 273.11, subdivisions 1a and 14; 
  2.29            273.111, subdivision 3; 273.13, subdivisions 23 and 
  2.30            31; 273.1398, subdivisions 2, 4, and by adding a 
  2.31            subdivision; 273.1399, subdivision 5; 275.07, 
  2.32            subdivisions 1a and 4; 275.61; 276.111, as amended; 
  2.33            278.01, by adding a subdivision; 278.08; 279.06, 
  2.34            subdivision 1; 279.37, by adding a subdivision; 
  2.35            281.17; 287.06; 289A.31, by adding a subdivision; 
  2.36            289A.50, by adding subdivisions; 289A.55, subdivision 
  2.37            5; 289A.56, subdivisions 4 and 6; 290.01, subdivision 
  2.38            4a; 290.06, subdivisions 1, 2c, 22, and by adding a 
  2.39            subdivision; 290.091, subdivision 2; 290.0922, 
  2.40            subdivisions 1 and 3; 290.095, subdivision 3; 290.17, 
  2.41            subdivision 2; 290A.03, subdivision 14; 290A.04, 
  2.42            subdivisions 2 and 2h, as amended; 290A.07, 
  2.43            subdivision 3, as amended; 290A.10; 290A.14; 290A.25; 
  2.44            295.51, subdivision 1, and by adding a subdivision; 
  2.45            295.52, by adding a subdivision; 295.54, subdivisions 
  2.46            1, 2, and by adding a subdivision; 296.01, 
  2.47            subdivisions 2 and 13; 296.02, subdivision 8, and by 
  2.48            adding a subdivision; 296.025, subdivision 6; 296.141, 
  2.49            subdivisions 4 and 5; 296.15, by adding a subdivision; 
  2.50            296.17, subdivision 7; 297.04, subdivision 9; 297A.01, 
  2.51            subdivision 16; 297A.09; 297A.14, by adding a 
  2.52            subdivision; 297A.15, subdivisions 4, 5, and 6; 
  2.53            297A.21, subdivision 4; 297A.211, subdivisions 1 and 
  2.54            3; 297A.24, subdivision 1; 297A.25, subdivisions 8, 
  2.55            14, 28, and by adding subdivisions; 297A.256, 
  2.56            subdivision 1; 297A.2572; 297A.2573; 297A.44, 
  2.57            subdivision 1; 297A.46; 297E.02, subdivisions 4 and 
  2.58            10; 298.01, subdivision 4e; 298.28, subdivisions 2, 5, 
  2.59            and 10; 298.75, subdivision 1; 349.15, by adding a 
  2.60            subdivision; 349.154, subdivision 2; 375.192, 
  2.61            subdivision 2, and by adding a subdivision; 414.067, 
  2.62            subdivision 2; 428A.01, subdivisions 2 and 3; 428A.02, 
  2.63            subdivision 1; 444.075, by adding a subdivision; 
  2.64            458A.32, subdivision 4; 465.71; 469.040, by adding a 
  2.65            subdivision; 469.167, subdivision 2; 469.173, 
  2.66            subdivision 7; 469.176, subdivision 4f; 469.1761, 
  2.67            subdivision 1; 469.177, subdivision 3; 471.59, by 
  2.68            adding a subdivision; 473.39, subdivision 1, and by 
  2.69            adding a subdivision; 473.608, by adding a 
  2.70            subdivision; 473.625; 477A.011, subdivisions 3, 20, 
  2.71            27, 32, 34, 35, and by adding subdivisions; and 
  3.1             477A.013, subdivisions 6, 8, and 9; Minnesota Statutes 
  3.2             1995 Supplement, sections 16A.67, subdivision 5; 
  3.3             41A.09, subdivision 2a; 115B.48, by adding 
  3.4             subdivisions; 115B.49, subdivisions 2 and 4; 116.07, 
  3.5             subdivision 10; 124.226, subdivision 10; 124.2711, 
  3.6             subdivision 2a; 124.83, subdivision 4; 124.95, 
  3.7             subdivision 4; 124A.03, subdivision 2; 124A.23, 
  3.8             subdivision 1; 168.013, subdivision 1a; 256.026; 
  3.9             273.11, subdivision 16; 273.124, subdivisions 1, 3, 
  3.10            and 13; 273.13, subdivisions 24 and 25; 273.1398, 
  3.11            subdivisions 1, 6, and 8; 273.1399, subdivision 6; 
  3.12            275.065, subdivisions 3 and 6; 275.08, subdivision 1b; 
  3.13            276.012; 276.04, subdivision 2; 289A.40, subdivision 
  3.14            1; 290.191, subdivisions 5 and 6; 290A.03, subdivision 
  3.15            6; 290A.04, subdivisions 2h and 6; 295.50, 
  3.16            subdivisions 3 and 4; 295.53, subdivisions 1 and 5; 
  3.17            296.02, subdivisions 1 and 1b; 296.025, subdivisions 1 
  3.18            and 1b; 296.12, subdivision 3; 297A.02, subdivision 4; 
  3.19            297A.25, subdivisions 57, 59, and 61; 297A.45, 
  3.20            subdivisions 2, 3, and 4; 297B.01, subdivision 8; 
  3.21            298.227; 298.24, subdivision 1; 298.28, subdivision 
  3.22            9a; 298.296, subdivision 4; 349.12, subdivision 25; 
  3.23            428A.05; 465.82, subdivision 2; 469.169, subdivisions 
  3.24            9 and 10; 469.175, subdivision 5; 469.176, 
  3.25            subdivisions 2, 4c, and 7; 473.253, subdivision 1; 
  3.26            473.39, subdivision 1b; 473.446, subdivisions 1 and 8; 
  3.27            473.448; 473.711, subdivision 2; 477A.0121, 
  3.28            subdivision 4; 477A.0132; 477A.03, subdivision 2; and 
  3.29            501B.38, subdivision 1a; Laws 1971, chapter 869, 
  3.30            sections 2, subdivisions 2, as amended, 14, and 17, as 
  3.31            added; 3, subdivisions 5, 6, and 9; 4, subdivisions 1, 
  3.32            2, and 5, as amended; 5, subdivisions 1 and 3; 8; 10, 
  3.33            subdivision 3b, as added; 12, subdivisions 1, as 
  3.34            amended, and 2, as amended; 17, subdivision 11; 19; 
  3.35            20, subdivision 2; 21; and 24; Laws 1985, chapter 302, 
  3.36            section 2, subdivision 1, as amended; Laws 1989, 
  3.37            chapter 211, section 4, subdivision 1; Laws 1991, 
  3.38            chapter 291, article 8, section 27; Laws 1992, chapter 
  3.39            511, article 8, section 39; Laws 1993, chapter 375, 
  3.40            article 9, section 45, subdivisions 2 and 3; Laws 
  3.41            1994, chapter 587, articles 3, section 21; and 5, 
  3.42            section 27, subdivisions 1, as amended, 5, as amended, 
  3.43            6, as amended, 8, as amended, 9, as amended, and 10, 
  3.44            as amended; and Laws 1995, chapter 264, articles 2, 
  3.45            sections 40; 42, subdivision 1; and 44; 3, section 45; 
  3.46            and 5, sections 40, subdivision 1; 44, subdivision 4; 
  3.47            and 45, subdivision 1; proposing coding for new law in 
  3.48            Minnesota Statutes, chapters 103D; 115B; 116G; 124; 
  3.49            162; 273; 276; 281; 287; 290; 290A; 297A; 375; 428A; 
  3.50            473; 475; and 477A; proposing coding for new law as 
  3.51            Minnesota Statutes, chapter 276A; repealing Minnesota 
  3.52            Statutes 1994, sections 162.07, subdivision 4; 290.06, 
  3.53            subdivision 21; 290.092; 290.0921; 290.0922; 290A.04, 
  3.54            subdivisions 2a and 2b; 290A.091; 290A.23, subdivision 
  3.55            1; 295.37; 295.39; 295.40; 295.41; 295.42; 295.43; 
  3.56            295.50, subdivisions 8, 9, 9a, 11, 12, and 12a; 
  3.57            296.25, subdivision 1a; 297A.01, subdivisions 17 and 
  3.58            20; 297A.02, subdivisions 2 and 5; 297A.14, 
  3.59            subdivision 3; 297A.24, subdivision 2; 297A.25, 
  3.60            subdivision 53; 473.39, subdivision 1a; 473.446, 
  3.61            subdivision 3; 477A.011, subdivisions 35 and 37; 
  3.62            477A.013, subdivision 6; and 477A.014, subdivision 1a; 
  3.63            Minnesota Statutes 1995 Supplement, sections 473.39, 
  3.64            subdivision 1b; 473.446, subdivision 1a; and 477A.011, 
  3.65            subdivision 36; Laws 1971, chapter 869, section 6, 
  3.66            subdivision 3; and Laws 1987, chapter 285. 
  3.67  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.68                             ARTICLE 1 
  4.1                       CONSTITUTIONAL AMENDMENT 
  4.2      Section 1.  [CONSTITUTIONAL AMENDMENT PROPOSED.] 
  4.3      An amendment to the Minnesota Constitution, adding sections 
  4.4   to article X is proposed to the people. 
  4.5      If adopted, the sections will read as follows: 
  4.6      Sec. 9.  No less than two-thirds of the costs of operating 
  4.7   the state's entire system of public primary and secondary 
  4.8   schools will be funded from sources other than property taxes.  
  4.9   This limitation does not apply to the extent that property tax 
  4.10  revenues exceeding this limit are authorized by local 
  4.11  referendums.  Referendum levies imposed by local school 
  4.12  districts for school operations with voter approval after 
  4.13  November 7, 1996, shall not exceed 20 percent of the amount of 
  4.14  funding per student provided by the state for the operations of 
  4.15  that school district.  Referendum levies approved prior to 
  4.16  November 8, 1996, shall terminate on the termination date set 
  4.17  for those levies as of that date. 
  4.18     The legislature shall provide by law for an equal amount of 
  4.19  operating funds for the public education of each student in 
  4.20  similar circumstances, except to the extent of the operating 
  4.21  referenda authorized in this section and except that the 
  4.22  legislature may allow more funds for school districts spending 
  4.23  more at the adoption of this amendment until each school 
  4.24  district in Minnesota spends the same amount for each student in 
  4.25  similar circumstances. 
  4.26     Article X, section 10, will read: 
  4.27     Sec. 10.  A permanent property taxpayers' trust fund is 
  4.28  established in the state treasury.  The fund consists of the 
  4.29  revenues derived from a sales and use tax at a rate of 1.5 
  4.30  percent on all taxable sales, excluding motor vehicles, 
  4.31  including penalties and interest paid with respect to the sales 
  4.32  and use taxes.  If the legislature enacts changes in the sales 
  4.33  tax base in 1997 or any later year that are determined by the 
  4.34  legislature to increase the total sales tax base by more than 
  4.35  five percent, the tax proceeds attributable to the change are 
  4.36  not included in the taxpayers' trust fund. 
  5.1      Funds in the property taxpayers' trust fund shall be 
  5.2   appropriated in the manner prescribed by law solely for property 
  5.3   tax relief for property taxpayers.  At least 50 percent of the 
  5.4   fund shall be distributed to cities through a program designed 
  5.5   to compensate for differences in revenue need and differences in 
  5.6   property wealth among cities, and the remainder of the fund 
  5.7   shall be distributed through a program designed to provide 
  5.8   property tax relief directly to homeowners and renters. 
  5.9      Sec. 2.  [SUBMISSION TO VOTERS.] 
  5.10     The proposed amendment must be submitted to the people at 
  5.11  the 1996 general election.  The question submitted shall be: 
  5.12     "Shall the Minnesota Constitution be amended to limit 
  5.13  property taxes for public education and to dedicate 1.5 cents of 
  5.14  the sales and use tax to a property taxpayers' trust fund to be 
  5.15  used for property tax relief? 
  5.16                                     Yes .......
  5.17                                     No ........"
  5.18     Sec. 3.  [SUBMISSION TO VOTERS CANCELED.] 
  5.19     If the remainder of this bill including any appropriations 
  5.20  in it does not become law, the question in section 2 shall not 
  5.21  be submitted to the voters. 
  5.22                             ARTICLE 2 
  5.23                        PROPERTY TAX REFORM 
  5.24     Section 1.  Minnesota Statutes 1994, section 162.081, 
  5.25  subdivision 4, is amended to read: 
  5.26     Subd. 4.  [FORMULA FOR DISTRIBUTION TO TOWNS; PURPOSES.] 
  5.27  Money apportioned to a county from the town road account must be 
  5.28  distributed to the treasurer of each town within the county, 
  5.29  according to a distribution formula adopted by the county 
  5.30  board.  The formula must take into account each town's levy for 
  5.31  road and bridge purposes, its population and town road mileage, 
  5.32  and other factors the county board deems advisable in the 
  5.33  interests of achieving equity among the towns.  Distribution of 
  5.34  town road funds to each town treasurer must be made by March 1, 
  5.35  annually, or within 30 days after receipt of payment from the 
  5.36  commissioner.  Distribution of funds to town treasurers in a 
  6.1   county which has not adopted a distribution formula under this 
  6.2   subdivision must be made according to a formula prescribed by 
  6.3   the commissioner by rule.  A formula adopted by a county board 
  6.4   or by the commissioner must provide that a town, in order to be 
  6.5   eligible for distribution of funds from the town road account in 
  6.6   a calendar year, must have levied ~~before the deduction of~~ 
  6.7   ~~homestead and agricultural credit aid certified under section~~ 
  6.8   ~~273.1398, subdivision 2,~~ for taxes payable in the previous year 
  6.9   for road and bridge purposes at least 0.04835 percent of taxable 
  6.10  market value.  For purposes of this eligibility requirement, 
  6.11  taxable market value means taxable market value for taxes 
  6.12  payable two years prior to the aid distribution year.  
  6.13     Money distributed to a town under this subdivision may be 
  6.14  expended by the town only for the construction, reconstruction, 
  6.15  and gravel maintenance of town roads within the town. 
  6.16     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
  6.17  273.13, subdivision 24, is amended to read: 
  6.18     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
  6.19  property and utility real and personal property, except class 5 
  6.20  property as identified in subdivision 31, clause (1), is class 
  6.21  3a.  It has a class rate of ~~three~~ 2.5 percent of the first 
  6.22  $100,000 of market value ~~for taxes payable in 1993 and~~ 
  6.23  ~~thereafter~~, and ~~5.06~~ four percent of the market value over 
  6.24  $100,000 for taxes payable in 1997 and thereafter.  In the case 
  6.25  of state-assessed commercial, industrial, and utility property 
  6.26  owned by one person or entity, only one parcel has a reduced 
  6.27  class rate on the first $100,000 of market value.  In the case 
  6.28  of other commercial, industrial, and utility property owned by 
  6.29  one person or entity, only one parcel in each county has a 
  6.30  reduced class rate on the first $100,000 of market value, except 
  6.31  that: 
  6.32     (1) if the market value of the parcel is less than 
  6.33  $100,000, and additional parcels are owned by the same person or 
  6.34  entity in the same city or town within that county, the reduced 
  6.35  class rate shall be applied up to a combined total market value 
  6.36  of $100,000 for all parcels owned by the same person or entity 
  7.1   in the same city or town within the county; 
  7.2      (2) in the case of grain, fertilizer, and feed elevator 
  7.3   facilities, as defined in section 18C.305, subdivision 1, or 
  7.4   232.21, subdivision 8, the limitation to one parcel per owner 
  7.5   per county for the reduced class rate shall not apply, but there 
  7.6   shall be a limit of $100,000 of preferential value per site of 
  7.7   contiguous parcels owned by the same person or entity.  Only the 
  7.8   value of the elevator portion of each parcel shall qualify for 
  7.9   treatment under this clause.  For purposes of this subdivision, 
  7.10  contiguous parcels include parcels separated only by a railroad 
  7.11  or public road right-of-way; and 
  7.12     (3) in the case of property owned by a nonprofit charitable 
  7.13  organization that qualifies for tax exemption under section 
  7.14  501(c)(3) of the Internal Revenue Code of 1986, as amended 
  7.15  through December 31, 1993, if the property is used as a business 
  7.16  incubator, the limitation to one parcel per owner per county for 
  7.17  the reduced class rate shall not apply, provided that the 
  7.18  reduced rate applies only to the first $100,000 of value per 
  7.19  parcel owned by the organization.  As used in this clause, a 
  7.20  "business incubator" is a facility used for the development of 
  7.21  nonretail businesses, offering access to equipment, space, 
  7.22  services, and advice to the tenant businesses, for the purpose 
  7.23  of encouraging economic development, diversification, and job 
  7.24  creation in the area served by the organization. 
  7.25     To receive the reduced class rate on additional parcels 
  7.26  under clause (1), (2), or (3), the taxpayer must notify the 
  7.27  county assessor that the taxpayer owns more than one parcel that 
  7.28  qualifies under clause (1), (2), or (3). 
  7.29     (b) Employment property defined in section 469.166, during 
  7.30  the period provided in section 469.170, shall constitute class 
  7.31  3b and has a class rate of 2.3 percent of the first $50,000 of 
  7.32  market value and 3.6 percent of the remainder, except that for 
  7.33  employment property located in a border city enterprise zone 
  7.34  designated pursuant to section 469.168, subdivision 4, paragraph 
  7.35  (c), the class rate of the first $100,000 of market value and 
  7.36  the class rate of the remainder is determined under paragraph 
  8.1   (a), unless the governing body of the city designated as an 
  8.2   enterprise zone determines that a specific parcel shall be 
  8.3   assessed pursuant to the first clause of this sentence.  The 
  8.4   governing body may provide for assessment under the first clause 
  8.5   of the preceding sentence only for property which is located in 
  8.6   an area which has been designated by the governing body for the 
  8.7   receipt of tax reductions authorized by section 469.171, 
  8.8   subdivision 1. 
  8.9      (c) Structures which are (i) located on property classified 
  8.10  as class 3a, (ii) constructed under an initial building permit 
  8.11  issued after January 2, 1996, (iii) located in a transit zone as 
  8.12  defined under section 473.3915, subdivision 3, (iv) located 
  8.13  within the boundaries of a school district, and (v) not 
  8.14  primarily used for retail or transient lodging purposes, shall 
  8.15  have a class rate of four percent on that portion of the market 
  8.16  value in excess of $100,000 and any market value under $100,000 
  8.17  that does not qualify for the three percent class rate under 
  8.18  paragraph (a).  As used in item (v), a structure is primarily 
  8.19  used for retail or transient lodging purposes if over 50 percent 
  8.20  of its square footage is used for those purposes.  The four 
  8.21  percent rate shall also apply to improvements to existing 
  8.22  structures that meet the requirements of items (i) to (v) if the 
  8.23  improvements are constructed under an initial building permit 
  8.24  issued after January 2, 1996, even if the remainder of the 
  8.25  structure was constructed prior to January 2, 1996.  For the 
  8.26  purposes of this paragraph, a structure shall be considered to 
  8.27  be located in a transit zone if any portion of the structure 
  8.28  lies within the zone.  If any property once eligible for 
  8.29  treatment under this paragraph ceases to remain eligible due to 
  8.30  revisions in transit zone boundaries, the property shall 
  8.31  continue to receive treatment under this paragraph for a period 
  8.32  of three years. 
  8.33     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
  8.34  273.13, subdivision 25, is amended to read: 
  8.35     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
  8.36  estate containing four or more units and used or held for use by 
  9.1   the owner or by the tenants or lessees of the owner as a 
  9.2   residence for rental periods of 30 days or more.  Class 4a also 
  9.3   includes hospitals licensed under sections 144.50 to 144.56, 
  9.4   other than hospitals exempt under section 272.02, and contiguous 
  9.5   property used for hospital purposes, without regard to whether 
  9.6   the property has been platted or subdivided.  Class 4a property 
  9.7   in a city with a population of 5,000 or less, that is (1) 
  9.8   located outside of the metropolitan area, as defined in section 
  9.9   473.121, subdivision 2, or outside any county contiguous to the 
  9.10  metropolitan area, and (2) whose city boundary is at least 15 
  9.11  miles from the boundary of any city with a population greater 
  9.12  than 5,000 has a class rate of 2.3 percent of market value ~~for~~ 
  9.13  ~~taxes payable in 1996 and thereafter~~.  All other class 4a 
  9.14  property has a class rate of ~~3.4 percent of market value for~~ 
  9.15  ~~taxes payable in 1996~~ 2.5 percent for taxes payable in 1997 and 
  9.16  thereafter.  For purposes of this paragraph, population has the 
  9.17  same meaning given in section 477A.011, subdivision 3. 
  9.18     (b) Class 4b includes: 
  9.19     (1) residential real estate containing less than four 
  9.20  units, other than seasonal residential, and recreational; 
  9.21     (2) manufactured homes not classified under any other 
  9.22  provision; 
  9.23     (3) a dwelling, garage, and surrounding one acre of 
  9.24  property on a nonhomestead farm classified under subdivision 23, 
  9.25  paragraph (b).  
  9.26     Class 4b property has a class rate of ~~2.8 percent of market~~ 
  9.27  ~~value for taxes payable in 1992, 2.5 percent of market value for~~ 
  9.28  ~~taxes payable in 1993, and 2.3 percent of market value for taxes~~ 
  9.29  ~~payable in 1994~~ 2.0 percent for taxes payable in 1997 and 
  9.30  thereafter, provided that the first $72,000 market value of 
  9.31  class 4b single family residences has a class rate of one 
  9.32  percent. 
  9.33     (c) Class 4c property includes: 
  9.34     (1) a structure that is:  
  9.35     (i) situated on real property that is used for housing for 
  9.36  the elderly or for low- and moderate-income families as defined 
 10.1   in Title II, as amended through December 31, 1990, of the 
 10.2   National Housing Act or the Minnesota housing finance agency law 
 10.3   of 1971, as amended, or rules promulgated by the agency and 
 10.4   financed by a direct federal loan or federally insured loan made 
 10.5   pursuant to Title II of the Act; or 
 10.6      (ii) situated on real property that is used for housing the 
 10.7   elderly or for low- and moderate-income families as defined by 
 10.8   the Minnesota housing finance agency law of 1971, as amended, or 
 10.9   rules adopted by the agency pursuant thereto and financed by a 
 10.10  loan made by the Minnesota housing finance agency pursuant to 
 10.11  the provisions of the act.  
 10.12     This clause applies only to property of a nonprofit or 
 10.13  limited dividend entity.  Property is classified as class 4c 
 10.14  under this clause for 15 years from the date of the completion 
 10.15  of the original construction or substantial rehabilitation, or 
 10.16  for the original term of the loan.  
 10.17     (2) a structure that is: 
 10.18     (i) situated upon real property that is used for housing 
 10.19  lower income families or elderly or handicapped persons, as 
 10.20  defined in section 8 of the United States Housing Act of 1937, 
 10.21  as amended; and 
 10.22     (ii) owned by an entity which has entered into a housing 
 10.23  assistance payments contract under section 8 which provides 
 10.24  assistance for 100 percent of the dwelling units in the 
 10.25  structure, other than dwelling units intended for management or 
 10.26  maintenance personnel.  Property is classified as class 4c under 
 10.27  this clause for the term of the housing assistance payments 
 10.28  contract, including all renewals, or for the term of its 
 10.29  permanent financing, whichever is shorter; and 
 10.30     (3) a qualified low-income building as defined in section 
 10.31  42(c)(2) of the Internal Revenue Code of 1986, as amended 
 10.32  through December 31, 1990, that (i) receives a low-income 
 10.33  housing credit under section 42 of the Internal Revenue Code of 
 10.34  1986, as amended through December 31, 1990; or (ii) meets the 
 10.35  requirements of that section and receives public financing, 
 10.36  except financing provided under sections 469.174 to 469.179, 
 11.1   which contains terms restricting the rents; or (iii) meets the 
 11.2   requirements of section 273.1317.  Classification pursuant to 
 11.3   this clause is limited to a term of 15 years.  The public 
 11.4   financing received must be from at least one of the following 
 11.5   sources:  government issued bonds exempt from taxes under 
 11.6   section 103 of the Internal Revenue Code of 1986, as amended 
 11.7   through December 31, 1993, the proceeds of which are used for 
 11.8   the acquisition or rehabilitation of the building; programs 
 11.9   under section 221(d)(3), 202, or 236, of Title II of the 
 11.10  National Housing Act; rental housing program funds under Section 
 11.11  8 of the United States Housing Act of 1937 or the market rate 
 11.12  family graduated payment mortgage program funds administered by 
 11.13  the Minnesota housing finance agency that are used for the 
 11.14  acquisition or rehabilitation of the building; public financing 
 11.15  provided by a local government used for the acquisition or 
 11.16  rehabilitation of the building, including grants or loans from 
 11.17  federal community development block grants, HOME block grants, 
 11.18  or residential rental bonds issued under chapter 474A; or other 
 11.19  rental housing program funds provided by the Minnesota housing 
 11.20  finance agency for the acquisition or rehabilitation of the 
 11.21  building. 
 11.22     For all properties described in clauses (1), (2), and (3) 
 11.23  and in paragraph (d), the market value determined by the 
 11.24  assessor must be based on the normal approach to value using 
 11.25  normal unrestricted rents unless the owner of the property 
 11.26  elects to have the property assessed under Laws 1991, chapter 
 11.27  291, article 1, section 55.  If the owner of the property elects 
 11.28  to have the market value determined on the basis of the actual 
 11.29  restricted rents, as provided in Laws 1991, chapter 291, article 
 11.30  1, section 55, the property will be assessed at the rate 
 11.31  provided for class 4a or class 4b property, as appropriate.  
 11.32  Properties described in clauses (1)(ii), (3), and (4) may apply 
 11.33  to the assessor for valuation under Laws 1991, chapter 291, 
 11.34  article 1, section 55.  The land on which these structures are 
 11.35  situated has the class rate given in paragraph (b) if the 
 11.36  structure contains fewer than four units, and the class rate 
 12.1   given in paragraph (a) if the structure contains four or more 
 12.2   units.  This clause applies only to the property of a nonprofit 
 12.3   or limited dividend entity.  
 12.4      (4) a parcel of land, not to exceed one acre, and its 
 12.5   improvements or a parcel of unimproved land, not to exceed one 
 12.6   acre, if it is owned by a neighborhood real estate trust and at 
 12.7   least 60 percent of the dwelling units, if any, on all land 
 12.8   owned by the trust are leased to or occupied by lower income 
 12.9   families or individuals.  This clause does not apply to any 
 12.10  portion of the land or improvements used for nonresidential 
 12.11  purposes.  For purposes of this clause, a lower income family is 
 12.12  a family with an income that does not exceed 65 percent of the 
 12.13  median family income for the area, and a lower income individual 
 12.14  is an individual whose income does not exceed 65 percent of the 
 12.15  median individual income for the area, as determined by the 
 12.16  United States Secretary of Housing and Urban Development.  For 
 12.17  purposes of this clause, "neighborhood real estate trust" means 
 12.18  an entity which is certified by the governing body of the 
 12.19  municipality in which it is located to have the following 
 12.20  characteristics: 
 12.21     (a) it is a nonprofit corporation organized under chapter 
 12.22  317A; 
 12.23     (b) it has as its principal purpose providing housing for 
 12.24  lower income families in a specific geographic community 
 12.25  designated in its articles or bylaws; 
 12.26     (c) it limits membership with voting rights to residents of 
 12.27  the designated community; and 
 12.28     (d) it has a board of directors consisting of at least 
 12.29  seven directors, 60 percent of whom are members with voting 
 12.30  rights and, to the extent feasible, 25 percent of whom are 
 12.31  elected by resident members of buildings owned by the trust; and 
 12.32     (5) except as provided in subdivision 22, paragraph (c), 
 12.33  real property devoted to temporary and seasonal residential 
 12.34  occupancy for recreation purposes, including real property 
 12.35  devoted to temporary and seasonal residential occupancy for 
 12.36  recreation purposes and not devoted to commercial purposes for 
 13.1   more than 250 days in the year preceding the year of 
 13.2   assessment.  For purposes of this clause, property is devoted to 
 13.3   a commercial purpose on a specific day if any portion of the 
 13.4   property is used for residential occupancy, and a fee is charged 
 13.5   for residential occupancy.  Class 4c also includes commercial 
 13.6   use real property used exclusively for recreational purposes in 
 13.7   conjunction with class 4c property devoted to temporary and 
 13.8   seasonal residential occupancy for recreational purposes, up to 
 13.9   a total of two acres, provided the property is not devoted to 
 13.10  commercial recreational use for more than 250 days in the year 
 13.11  preceding the year of assessment and is located within two miles 
 13.12  of the class 4c property with which it is used.  Class 4c 
 13.13  property classified in this clause also includes the remainder 
 13.14  of class 1c resorts.  Owners of real property devoted to 
 13.15  temporary and seasonal residential occupancy for recreation 
 13.16  purposes and all or a portion of which was devoted to commercial 
 13.17  purposes for not more than 250 days in the year preceding the 
 13.18  year of assessment desiring classification as class 1c or 4c, 
 13.19  must submit a declaration to the assessor designating the cabins 
 13.20  or units occupied for 250 days or less in the year preceding the 
 13.21  year of assessment by January 15 of the assessment year.  Those 
 13.22  cabins or units and a proportionate share of the land on which 
 13.23  they are located will be designated class 1c or 4c as otherwise 
 13.24  provided.  The remainder of the cabins or units and a 
 13.25  proportionate share of the land on which they are located will 
 13.26  be designated as class 3a.  The first $100,000 of the market 
 13.27  value of the remainder of the cabins or units and a 
 13.28  proportionate share of the land on which they are located shall 
 13.29  have a class rate of three percent.  The owner of property 
 13.30  desiring designation as class 1c or 4c property must provide 
 13.31  guest registers or other records demonstrating that the units 
 13.32  for which class 1c or 4c designation is sought were not occupied 
 13.33  for more than 250 days in the year preceding the assessment if 
 13.34  so requested.  The portion of a property operated as a (1) 
 13.35  restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 13.36  facility operated on a commercial basis not directly related to 
 14.1   temporary and seasonal residential occupancy for recreation 
 14.2   purposes shall not qualify for class 1c or 4c; 
 14.3      (6) real property up to a maximum of one acre of land owned 
 14.4   by a nonprofit community service oriented organization; provided 
 14.5   that the property is not used for a revenue-producing activity 
 14.6   for more than six days in the calendar year preceding the year 
 14.7   of assessment and the property is not used for residential 
 14.8   purposes on either a temporary or permanent basis.  For purposes 
 14.9   of this clause, a "nonprofit community service oriented 
 14.10  organization" means any corporation, society, association, 
 14.11  foundation, or institution organized and operated exclusively 
 14.12  for charitable, religious, fraternal, civic, or educational 
 14.13  purposes, and which is exempt from federal income taxation 
 14.14  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 14.15  Revenue Code of 1986, as amended through December 31, 1990.  For 
 14.16  purposes of this clause, "revenue-producing activities" shall 
 14.17  include but not be limited to property or that portion of the 
 14.18  property that is used as an on-sale intoxicating liquor or 3.2 
 14.19  percent malt liquor establishment licensed under chapter 340A, a 
 14.20  restaurant open to the public, bowling alley, a retail store, 
 14.21  gambling conducted by organizations licensed under chapter 349, 
 14.22  an insurance business, or office or other space leased or rented 
 14.23  to a lessee who conducts a for-profit enterprise on the 
 14.24  premises.  Any portion of the property which is used for 
 14.25  revenue-producing activities for more than six days in the 
 14.26  calendar year preceding the year of assessment shall be assessed 
 14.27  as class 3a.  The use of the property for social events open 
 14.28  exclusively to members and their guests for periods of less than 
 14.29  24 hours, when an admission is not charged nor any revenues are 
 14.30  received by the organization shall not be considered a 
 14.31  revenue-producing activity; 
 14.32     (7) post-secondary student housing of not more than one 
 14.33  acre of land that is owned by a nonprofit corporation organized 
 14.34  under chapter 317A and is used exclusively by a student 
 14.35  cooperative, sorority, or fraternity for on-campus housing or 
 14.36  housing located within two miles of the border of a college 
 15.1   campus; and 
 15.2      (8) manufactured home parks as defined in section 327.14, 
 15.3   subdivision 3. 
 15.4      Class 4c property has a class rate of 2.3 percent of market 
 15.5   value, except that (i) for each parcel of seasonal residential 
 15.6   recreational property not used for commercial purposes under 
 15.7   clause (5) the first $72,000 of market value on each parcel has 
 15.8   a class rate of ~~1.9~~ 1.5 percent for taxes payable in 1997 ~~and~~ 
 15.9   ~~1.8 percent for taxes payable in 1998~~ and thereafter, and the 
 15.10  market value of each parcel that exceeds $72,000 has a class 
 15.11  rate of 2.5 percent, and (ii) manufactured home parks assessed 
 15.12  under clause (8) have a class rate of two percent for taxes 
 15.13  payable in 1996, and thereafter.  
 15.14     (d) Class 4d property includes: 
 15.15     (1) a structure that is: 
 15.16     (i) situated on real property that is used for housing for 
 15.17  the elderly or for low and moderate income families as defined 
 15.18  by the Farmers Home Administration; 
 15.19     (ii) located in a municipality of less than 10,000 
 15.20  population; and 
 15.21     (iii) financed by a direct loan or insured loan from the 
 15.22  Farmers Home Administration.  Property is classified under this 
 15.23  clause for 15 years from the date of the completion of the 
 15.24  original construction or for the original term of the loan.  
 15.25     The class rates in paragraph (c), clauses (1), (2), and (3) 
 15.26  and this clause apply to the properties described in them, only 
 15.27  in proportion to occupancy of the structure by elderly or 
 15.28  handicapped persons or low and moderate income families as 
 15.29  defined in the applicable laws unless construction of the 
 15.30  structure had been commenced prior to January 1, 1984; or the 
 15.31  project had been approved by the governing body of the 
 15.32  municipality in which it is located prior to June 30, 1983; or 
 15.33  financing of the project had been approved by a federal or state 
 15.34  agency prior to June 30, 1983.  For those properties, 4c or 4d 
 15.35  classification is available only for those units meeting the 
 15.36  requirements of section 273.1318. 
 16.1      Classification under this clause is only available to 
 16.2   property of a nonprofit or limited dividend entity. 
 16.3      In the case of a structure financed or refinanced under any 
 16.4   federal or state mortgage insurance or direct loan program 
 16.5   exclusively for housing for the elderly or for housing for the 
 16.6   handicapped, a unit shall be considered occupied so long as it 
 16.7   is actually occupied by an elderly or handicapped person or, if 
 16.8   vacant, is held for rental to an elderly or handicapped person. 
 16.9      (2) For taxes payable in 1992, 1993, and 1994, only, 
 16.10  buildings and appurtenances, together with the land upon which 
 16.11  they are located, leased by the occupant under the community 
 16.12  lending model lease-purchase mortgage loan program administered 
 16.13  by the Federal National Mortgage Association, provided the 
 16.14  occupant's income is no greater than 60 percent of the county or 
 16.15  area median income, adjusted for family size and the building 
 16.16  consists of existing single family or duplex housing.  The lease 
 16.17  agreement must provide for a portion of the lease payment to be 
 16.18  escrowed as a nonrefundable down payment on the housing.  To 
 16.19  qualify under this clause, the taxpayer must apply to the county 
 16.20  assessor by May 30 of each year.  The application must be 
 16.21  accompanied by an affidavit or other proof required by the 
 16.22  assessor to determine qualification under this clause. 
 16.23     (3) Qualifying buildings and appurtenances, together with 
 16.24  the land upon which they are located, leased for a period of up 
 16.25  to five years by the occupant under a lease-purchase program 
 16.26  administered by the Minnesota housing finance agency or a 
 16.27  housing and redevelopment authority authorized under sections 
 16.28  469.001 to 469.047, provided the occupant's income is no greater 
 16.29  than 80 percent of the county or area median income, adjusted 
 16.30  for family size, and the building consists of two or less 
 16.31  dwelling units.  The lease agreement must provide for a portion 
 16.32  of the lease payment to be escrowed as a nonrefundable down 
 16.33  payment on the housing.  The administering agency shall verify 
 16.34  the occupants income eligibility and certify to the county 
 16.35  assessor that the occupant meets the income criteria under this 
 16.36  paragraph.  To qualify under this clause, the taxpayer must 
 17.1   apply to the county assessor by May 30 of each year.  For 
 17.2   purposes of this section, "qualifying buildings and 
 17.3   appurtenances" shall be defined as one or two unit residential 
 17.4   buildings which are unoccupied and have been abandoned and 
 17.5   boarded for at least six months. 
 17.6      Class 4d property has a class rate of two percent of market 
 17.7   value except that property classified under clause (3), shall 
 17.8   have the same class rate as class 1a property. 
 17.9      (e) Residential rental property that would otherwise be 
 17.10  assessed as class 4 property under paragraph (a); paragraph (b), 
 17.11  clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 
 17.12  (4), is assessed at the class rate applicable to it under 
 17.13  Minnesota Statutes 1988, section 273.13, if it is found to be a 
 17.14  substandard building under section 273.1316.  Residential rental 
 17.15  property that would otherwise be assessed as class 4 property 
 17.16  under paragraph (d) is assessed at 2.3 percent of market value 
 17.17  if it is found to be a substandard building under section 
 17.18  273.1316. 
 17.19     Sec. 4.  Minnesota Statutes 1994, section 273.13, 
 17.20  subdivision 31, is amended to read: 
 17.21     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 17.22     (1) tools, implements, and machinery of an electric 
 17.23  generating, transmission, or distribution system or a pipeline 
 17.24  system transporting or distributing water, gas, crude oil, or 
 17.25  petroleum products or mains and pipes used in the distribution 
 17.26  of steam or hot or chilled water for heating or cooling 
 17.27  buildings, which are fixtures; 
 17.28     (2) unmined iron ore and low-grade iron-bearing formations 
 17.29  as defined in section 273.14; and 
 17.30     (3) all other property not otherwise classified. 
 17.31     Class 5 property has a class rate of ~~5.06~~ four percent of 
 17.32  market value. 
 17.33     Sec. 5.  Minnesota Statutes 1995 Supplement, section 
 17.34  273.1398, subdivision 1, is amended to read: 
 17.35     Subdivision 1.  [DEFINITIONS.] (a) In this section, the 
 17.36  terms defined in this subdivision have the meanings given them. 
 18.1      (b) "Unique taxing jurisdiction" means the geographic area 
 18.2   subject to the same set of local tax rates. 
 18.3      (c) "Net tax capacity" means the product of (i) the 
 18.4   appropriate net class rates for the year in which the aid is 
 18.5   payable, except that for aid payable in 1996 and thereafter the 
 18.6   class rate applicable to all class 4a shall be 3.4 percent, the 
 18.7   class rate applicable to all class 4b shall be 2.3 percent, the 
 18.8   class rate applicable to that portion of class 3a with a class 
 18.9   rate of three percent for taxes payable in 1996 shall be three 
 18.10  percent, the class rate applicable to that portion of class 3a 
 18.11  with a class rate of 4.6 percent for taxes payable in 1996 and 
 18.12  class 5 shall be 4.6 percent, and the class rate applicable to 
 18.13  the first $72,000 of market value of seasonal residential 
 18.14  recreational property with a class rate of two percent for taxes 
 18.15  payable in 1996 shall be 1.9 percent for taxes payable in 1997 
 18.16  and 1.8 percent for taxes payable in 1998 and thereafter; and 
 18.17  (ii) estimated market values for the assessment two years prior 
 18.18  to that in which aid is payable.  "Total net tax capacity" means 
 18.19  the net tax capacities for all property within the unique taxing 
 18.20  jurisdiction.  The total net tax capacity used shall be reduced 
 18.21  by the sum of (1) the unique taxing jurisdiction's net tax 
 18.22  capacity of commercial industrial property as defined in section 
 18.23  473F.02, subdivision 3, multiplied by the ratio determined 
 18.24  pursuant to section 473F.08, subdivision 6, for the 
 18.25  municipality, as defined in section 473F.02, subdivision 8, in 
 18.26  which the unique taxing jurisdiction is located, (2) the net tax 
 18.27  capacity of the captured value of tax increment financing 
 18.28  districts as defined in section 469.177, subdivision 2, and (3) 
 18.29  the net tax capacity of transmission lines deducted from a local 
 18.30  government's total net tax capacity under section 273.425.  ~~For~~ 
 18.31  ~~purposes of determining the net tax capacity of property~~ 
 18.32  ~~referred to in clauses (1), (2), and (3), the net tax capacity~~ 
 18.33  ~~shall be multiplied by the ratio of the highest class rate for~~ 
 18.34  ~~class 3a property for taxes payable in the year in which the aid~~ 
 18.35  ~~is payable to the highest class rate for class 3a property in~~ 
 18.36  ~~the prior year.~~  Net tax capacity cannot be less than zero. 
 19.1      (d) "Previous net tax capacity" means the product of the 
 19.2   appropriate net class rates for the year previous to the year in 
 19.3   which the aid is payable, and estimated market values for the 
 19.4   assessment two years prior to that in which aid is payable.  
 19.5   "Total previous net tax capacity" means the previous net tax 
 19.6   capacities for all property within the unique taxing 
 19.7   jurisdiction.  The total previous net tax capacity shall be 
 19.8   reduced by the sum of (1) the unique taxing jurisdiction's 
 19.9   previous net tax capacity of commercial-industrial property as 
 19.10  defined in section 473F.02, subdivision 3, multiplied by the 
 19.11  ratio determined pursuant to section 473F.08, subdivision 6, for 
 19.12  the municipality, as defined in section 473F.02, subdivision 8, 
 19.13  in which the unique taxing jurisdiction is located, (2) the 
 19.14  previous net tax capacity of the captured value of tax increment 
 19.15  financing districts as defined in section 469.177, subdivision 
 19.16  2, and (3) the previous net tax capacity of transmission lines 
 19.17  deducted from a local government's total net tax capacity under 
 19.18  section 273.425.  Previous net tax capacity cannot be less than 
 19.19  zero. 
 19.20     (e) "Equalized market values" are market values that have 
 19.21  been equalized by dividing the assessor's estimated market value 
 19.22  for the second year prior to that in which the aid is payable by 
 19.23  the assessment sales ratios determined by class in the 
 19.24  assessment sales ratio study conducted by the department of 
 19.25  revenue pursuant to section 124.2131 in the second year prior to 
 19.26  that in which the aid is payable.  The equalized market values 
 19.27  shall equal the unequalized market values divided by the 
 19.28  assessment sales ratio. 
 19.29     (f) "Equalized school levies" means the amounts levied for: 
 19.30     (1) general education under section 124A.23, subdivision 2; 
 19.31     (2) supplemental revenue under section 124A.22, subdivision 
 19.32  8a; 
 19.33     (3) capital expenditure facilities revenue under section 
 19.34  124.243, subdivision 3; 
 19.35     (4) capital expenditure equipment revenue under section 
 19.36  124.244, subdivision 2; 
 20.1      (5) basic transportation under section 124.226, subdivision 
 20.2   1; and 
 20.3      (6) referendum revenue under section 124A.03. 
 20.4      (g) "Current local tax rate" means the quotient derived by 
 20.5   dividing the taxes levied within a unique taxing jurisdiction 
 20.6   for taxes payable in the year prior to that for which aids are 
 20.7   being calculated by the total previous net tax capacity of the 
 20.8   unique taxing jurisdiction.  
 20.9      (h) For purposes of calculating and allocating homestead 
 20.10  and agricultural credit aid authorized pursuant to subdivision 2 
 20.11  for school districts and the disparity reduction aid authorized 
 20.12  in subdivision 3, "gross taxes levied on all properties," "gross 
 20.13  taxes," or "taxes levied" means the total net tax capacity based 
 20.14  taxes levied on all properties except that levied on the 
 20.15  captured value of tax increment districts as defined in section 
 20.16  469.177, subdivision 2, and that levied on the portion of 
 20.17  commercial industrial properties' assessed value or gross tax 
 20.18  capacity, as defined in section 473F.02, subdivision 3, subject 
 20.19  to the areawide tax as provided in section 473F.08, subdivision 
 20.20  6, in a unique taxing jurisdiction.  "Gross taxes" are before 
 20.21  any reduction for disparity reduction aid but "taxes levied" are 
 20.22  after any reduction for disparity reduction aid.  Gross taxes 
 20.23  levied or taxes levied cannot be less than zero.  
 20.24     "Taxes levied" excludes equalized school levies. 
 20.25     (i) "Human services aids" means: 
 20.26     (1) aid to families with dependent children under sections 
 20.27  256.82, subdivision 1, and 256.935, subdivision 1; 
 20.28     (2) medical assistance under sections 256B.041, subdivision 
 20.29  5, and 256B.19, subdivision 1; 
 20.30     (3) general assistance medical care under section 256D.03, 
 20.31  subdivision 6; 
 20.32     (4) general assistance under section 256D.03, subdivision 
 20.33  2; 
 20.34     (5) work readiness under section 256D.03, subdivision 2; 
 20.35     (6) emergency assistance under section 256.871, subdivision 
 20.36  6; 
 21.1      (7) Minnesota supplemental aid under section 256D.36, 
 21.2   subdivision 1; 
 21.3      (8) preadmission screening and alternative care grants; 
 21.4      (9) work readiness services under section 256D.051; 
 21.5      (10) case management services under section 256.736, 
 21.6   subdivision 13; 
 21.7      (11) general assistance claims processing, medical 
 21.8   transportation and related costs; and 
 21.9      (12) medical assistance, medical transportation and related 
 21.10  costs. 
 21.11     (j) "Household adjustment factor" means the number of 
 21.12  households for the second most recent year preceding that in 
 21.13  which the aids are payable divided by the number of households 
 21.14  for the third most recent year.  The household adjustment factor 
 21.15  cannot be less than one.  
 21.16     (k) "Growth adjustment factor" means the household 
 21.17  adjustment factor in the case of counties.  In the case of 
 21.18  cities, towns, school districts, and special taxing districts, 
 21.19  the growth adjustment factor equals one.  The growth adjustment 
 21.20  factor cannot be less than one.  
 21.21     (l) ~~For aid payable in 1992 and subsequent years,~~ 
 21.22  "Homestead and agricultural credit base" means the previous 
 21.23  year's certified homestead and agricultural credit aid 
 21.24  determined under subdivision 2 less any permanent aid reduction 
 21.25  in the previous year to homestead and agricultural credit aid 
 21.26  under section 477A.0132~~, plus, for aid payable in 1992, fiscal~~ 
 21.27  ~~disparity homestead and agricultural credit aid under~~ 
 21.28  ~~subdivision 2b~~.  
 21.29     (m) "Net tax capacity adjustment" means (1) the total 
 21.30  previous net tax capacity minus the total net tax capacity, 
 21.31  multiplied by (2) the unique taxing jurisdiction's current local 
 21.32  tax rate.  The net tax capacity adjustment cannot be less than 
 21.33  zero. 
 21.34     ~~(n) "Fiscal disparity adjustment" means the difference~~ 
 21.35  ~~between (1) a taxing jurisdiction's fiscal disparity~~ 
 21.36  ~~distribution levy under section 473F.08, subdivision 3, clause~~ 
 22.1   ~~(a), for taxes payable in the year prior to that for which aids~~ 
 22.2   ~~are being calculated, and (2) the same distribution levy~~ 
 22.3   ~~multiplied by the ratio of the highest class rate for class 3~~ 
 22.4   ~~property for taxes payable in the year prior to that for which~~ 
 22.5   ~~aids are being calculated to the highest class rate for class 3~~ 
 22.6   ~~property for taxes payable in the second prior year to that for~~ 
 22.7   ~~which aids are being calculated.  In the case of school~~ 
 22.8   ~~districts, the fiscal disparity distribution levy shall exclude~~ 
 22.9   ~~that part of the levy attributable to equalized school levies.~~ 
 22.10     Sec. 6.  Minnesota Statutes 1994, section 273.1398, 
 22.11  subdivision 2, is amended to read: 
 22.12     Subd. 2.  [HOMESTEAD AND AGRICULTURAL CREDIT AID.] 
 22.13  Homestead and agricultural credit aid for each unique taxing 
 22.14  jurisdiction equals the product of (1) the homestead and 
 22.15  agricultural credit aid base, and (2) the growth adjustment 
 22.16  factor~~, plus the net tax capacity adjustment and the fiscal~~ 
 22.17  ~~disparity adjustment~~.  Only school districts shall receive 
 22.18  homestead and agricultural credit aid in 1997 and thereafter. 
 22.19     Sec. 7.  Minnesota Statutes 1995 Supplement, section 
 22.20  273.1398, subdivision 6, is amended to read: 
 22.21     Subd. 6.  [PAYMENT.] The commissioner shall certify the 
 22.22  aids provided in subdivisions 2~~, 2b,~~ and 3~~, and 5~~ before 
 22.23  September 1 of the year preceding the distribution year to the 
 22.24  county auditor of the affected local government.  The aids 
 22.25  provided in ~~subdivisions 2, 2b,~~ subdivision 3~~, and 5~~ must be 
 22.26  paid to local governments other than school districts at the 
 22.27  times provided in section 477A.015 for payment of local 
 22.28  government aid to taxing jurisdictions, except that the first 
 22.29  one-half payment of disparity reduction aid provided in 
 22.30  subdivision 3 must be paid on or before August 31.  The 
 22.31  disparity reduction credit provided in subdivision 4 must be 
 22.32  paid to taxing jurisdictions other than school districts at the 
 22.33  time provided in section 473H.10, subdivision 3.  Aids and 
 22.34  credit reimbursements to school districts must be certified to 
 22.35  the commissioner of children, families, and learning and paid 
 22.36  under section 273.1392.  Except for education districts and 
 23.1   secondary cooperatives that receive revenue according to section 
 23.2   124.575, payment shall not be made to any taxing jurisdiction 
 23.3   that has ceased to levy a property tax.  
 23.4      Sec. 8.  Minnesota Statutes 1995 Supplement, section 
 23.5   273.1398, subdivision 8, is amended to read: 
 23.6      Subd. 8.  [APPROPRIATION.] An amount sufficient to pay the 
 23.7   aids and credits provided under this section for school 
 23.8   districts, intermediate school districts, or any group of school 
 23.9   districts levying as a single taxing entity, is annually 
 23.10  appropriated from the general fund to the commissioner of 
 23.11  children, families, and learning.  An amount sufficient to pay 
 23.12  the aids and credits provided under ~~this section~~ subdivisions 3 
 23.13  and 4 for counties, cities, towns, and special taxing districts 
 23.14  is annually appropriated from the general fund to the 
 23.15  commissioner of revenue.  A jurisdiction's aid amount may be 
 23.16  increased or decreased based on any prior year adjustments for 
 23.17  homestead credit or other property tax credit or aid programs. 
 23.18     Sec. 9.  Minnesota Statutes 1994, section 273.1399, 
 23.19  subdivision 5, is amended to read: 
 23.20     Subd. 5.  [LOCAL GOVERNMENT AIDS; HOMESTEAD AND 
 23.21  AGRICULTURAL AID CALCULATIONS.] (a) The reduction in state tax 
 23.22  increment financing aid for a municipality must be deducted 
 23.23  first from the local government aids to be paid to the 
 23.24  municipality.  ~~If the deduction exceeds the amount of the local~~ 
 23.25  ~~government aid, the rest must be deducted from the homestead and~~ 
 23.26  ~~agricultural credit aid to be paid to the municipality.~~ 
 23.27     (b) The amount of qualifying captured net tax capacity must 
 23.28  be included in adjusted net tax capacity for purposes of 
 23.29  computing the local government aid of the municipality that 
 23.30  approved the tax increment financing district. 
 23.31     Sec. 10.  Minnesota Statutes 1994, section 275.07, 
 23.32  subdivision 1a, is amended to read: 
 23.33     Subd. 1a.  [APPLICATION OF LIMITATIONS.] Any limitation 
 23.34  upon the amount that may be levied by a local taxing 
 23.35  jurisdiction shall apply to the sum of the levy as certified 
 23.36  under subdivision 1 plus the certified homestead and 
 24.1   agricultural credit aid amount under section 273.1398, 
 24.2   subdivision 2, and the county program reform aid amount under 
 24.3   section 477A.0123, unless the commissioner of revenue certifies 
 24.4   to the county auditor that the limitation applies to the levy 
 24.5   under subdivision 1 only. 
 24.6      Sec. 11.  Minnesota Statutes 1994, section 275.61, is 
 24.7   amended to read: 
 24.8      275.61 [~~REFERENDUM LEVY;~~ LEVIES AGAINST MARKET VALUE.] 
 24.9      Subdivision 1.  [REFERENDUM LEVY.] For local governmental 
 24.10  subdivisions other than school districts, any levy, including 
 24.11  the issuance of debt obligations payable in whole or in part 
 24.12  from property taxes, required to be approved and approved by the 
 24.13  voters at a general or special election for taxes payable in 
 24.14  1993 and thereafter, shall be levied against the referendum 
 24.15  market value of all taxable property within the governmental 
 24.16  subdivision, as defined in section 124A.02, subdivision 3b.  
 24.17     ~~Any levy amount subject to the requirements of this section~~ 
 24.18  ~~shall be certified separately to the county auditor under~~ 
 24.19  ~~section 275.07.~~ 
 24.20     The ballot shall state the maximum amount of the increased 
 24.21  levy as a percentage of referendum market value and the amount 
 24.22  that will be raised by the new referendum tax rate in the first 
 24.23  year it is to be levied. 
 24.24     Subd. 2.  [INCREASED LEVIES ON REFERENDUM MARKET VALUE.] At 
 24.25  the time for preliminary levy certification under section 
 24.26  275.065 and final levy certification under section 275.07, a 
 24.27  local governmental subdivision must also certify its revenue 
 24.28  base as defined under section 477A.011 to the county auditor.  
 24.29  For purposes of this subdivision only, "revenue base" means 
 24.30  those amounts that relate to taxes and aids payable in the year 
 24.31  following the preliminary and final certifications other than 
 24.32  disparity reduction aid under section 273.1398, subdivision 3, 
 24.33  and taconite aids under sections 298.28 and 298.282 which will 
 24.34  be the amounts that relate to aids payable in the current year.  
 24.35  For taxes payable in 1997 only, a local government subdivision 
 24.36  shall also certify its revenue base before reduction for 
 25.1   homestead and agricultural credit aid as provided under 
 25.2   Minnesota Statutes 1994, section 447A.011, for taxes and aids 
 25.3   payable in 1996.  From those amounts the auditor shall deduct 
 25.4   the portions of each local government's levy required to be 
 25.5   extended against referendum market value under subdivisions 1 
 25.6   and 2, and sections 124.975 and 124A.03, subdivision 2a.  The 
 25.7   auditor shall compare the adjusted amount for the current year 
 25.8   with the adjusted amount proposed for taxes payable in the 
 25.9   subsequent year.  If the percentage increase exceeds: 
 25.10     (1) the product of: 
 25.11     (i) one plus 3.5 percent; and 
 25.12     (ii) in the case of a local government subdivision other 
 25.13  than a school district, one plus the percentage change in its 
 25.14  population as defined under section 477A.011, subdivision 3, or 
 25.15  in the case of a school district, one plus the percentage change 
 25.16  in its resident pupils in average daily membership as defined 
 25.17  under section 124.17.  In either case, the percentage change 
 25.18  shall be calculated using the most immediately available year's 
 25.19  and the second most immediately available year's data.  In no 
 25.20  case shall the percentage change be less than zero; 
 25.21  minus 
 25.22     (2) one, 
 25.23  the county auditor shall levy the portion of the local 
 25.24  government's levy after deduction of the amounts required to be 
 25.25  extended against referendum market value under subdivisions 1 
 25.26  and 2 and sections 124.975 and 124A.03, subdivision 2a, that is 
 25.27  in excess of the local government subdivision's prior year's 
 25.28  levy after deduction of the amount required to be extended 
 25.29  against referendum market value under subdivisions 1 and 2 and 
 25.30  sections 124.975 and 124A.03, subdivision 2a, against referendum 
 25.31  market value for taxes payable in all subsequent years.  The 
 25.32  commissioner of revenue shall certify the population factors in 
 25.33  clause (1) to the respective county auditors at the same time as 
 25.34  the certification of aids under section 273.1398, subdivision 
 25.35  6.  The commissioner of children, families, and learning shall 
 25.36  certify the pupils in average daily membership factors in clause 
 26.1   (1) to the respective county auditors at the same time. 
 26.2      Subd. 3.  [CERTIFICATION OF LEVY.] Any levy amount subject 
 26.3   to the requirements of this section shall be certified 
 26.4   separately to the county auditor under section 275.07. 
 26.5      Sec. 12.  Minnesota Statutes 1995 Supplement, section 
 26.6   276.04, subdivision 2, is amended to read: 
 26.7      Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
 26.8   shall provide for the printing of the tax statements.  The 
 26.9   commissioner of revenue shall prescribe the form of the property 
 26.10  tax statement and its contents.  The statement must contain a 
 26.11  tabulated statement of the dollar amount due to each taxing 
 26.12  authority from the parcel of real property for which a 
 26.13  particular tax statement is prepared.  The dollar amounts due 
 26.14  the county, township or municipality, the total of the 
 26.15  metropolitan special taxing districts as defined in section 
 26.16  275.065, subdivision 3, paragraph (i), school district excess 
 26.17  referenda levy, remaining school district levy, and the total of 
 26.18  other voter approved referenda levies based on market value 
 26.19  under section 275.61 must be separately stated.  The amounts due 
 26.20  all other special taxing districts, if any, may be aggregated.  
 26.21  For the purposes of this subdivision, "school district excess 
 26.22  referenda levy" means school district taxes for operating 
 26.23  purposes approved at referenda, including those taxes based on 
 26.24  net tax capacity as well as those based on market value.  
 26.25  "School district excess referenda levy" does not include school 
 26.26  district taxes for capital expenditures approved at referendums 
 26.27  or school district taxes to pay for the debt service on bonds 
 26.28  approved at referenda.  The amount of the tax on contamination 
 26.29  value imposed under sections 270.91 to 270.98, if any, must also 
 26.30  be separately stated.  The dollar amounts, including the dollar 
 26.31  amount of any special assessments, may be rounded to the nearest 
 26.32  even whole dollar.  For purposes of this section whole 
 26.33  odd-numbered dollars may be adjusted to the next higher 
 26.34  even-numbered dollar.  The amount of market value excluded under 
 26.35  section 273.11, subdivision 16, if any, must also be listed on 
 26.36  the tax statement.  The statement shall include the following 
 27.1   sentence, printed in upper case letters in boldface print:  "THE 
 27.2   STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES.  
 27.3   THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING 
 27.4   CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."  
 27.5      (b) The property tax statements for manufactured homes and 
 27.6   sectional structures taxed as personal property shall contain 
 27.7   the same information that is required on the tax statements for 
 27.8   real property.  
 27.9      (c) Real and personal property tax statements must contain 
 27.10  the following information in the order given in this paragraph.  
 27.11  The information must contain the current year tax information in 
 27.12  the right column with the corresponding information for the 
 27.13  previous year in a column on the left: 
 27.14     (1) the property's estimated market value under section 
 27.15  273.11, subdivision 1; 
 27.16     (2) the property's taxable market value after reductions 
 27.17  under section 273.11, subdivisions 1a and 16; 
 27.18     (3) the property's gross tax, calculated by multiplying the 
 27.19  property's gross tax capacity times the total local tax rate and 
 27.20  adding to the result the sum of the aids enumerated in clause 
 27.21  (3); 
 27.22     (4) a total of the following aids: 
 27.23     (i) education aids payable under chapters 124 and 124A; 
 27.24     (ii) local government aids for cities, towns, and counties 
 27.25  under chapter 477A; and 
 27.26     (iii) disparity reduction aid under section 273.1398; 
 27.27     (5) for homestead residential and agricultural properties, 
 27.28  the homestead and agricultural credit ~~aid~~ exemption apportioned 
 27.29  to the property.  This amount is obtained by multiplying the 
 27.30  total local tax rate by the difference between the property's 
 27.31  gross and net tax capacities under section 273.13.  This amount 
 27.32  must be separately stated and identified as "homestead and 
 27.33  agricultural credit~~.~~ exemption"  ~~For purposes of comparison with~~ 
 27.34  ~~the previous year's amount for the statement for taxes payable~~ 
 27.35  ~~in 1990, the statement must show the homestead credit for taxes~~ 
 27.36  ~~payable in 1989 under section 273.13, and the agricultural~~ 
 28.1   ~~credit under section 273.132 for taxes payable in 1989~~; 
 28.2      (6) any credits received under sections 273.119; 273.123; 
 28.3   273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
 28.4   473H.10, except that the amount of credit received under section 
 28.5   273.135 must be separately stated and identified as "taconite 
 28.6   tax relief"; and 
 28.7      (7) the net tax payable in the manner required in paragraph 
 28.8   (a).  
 28.9      The commissioner of revenue shall certify to the county 
 28.10  auditor the actual or estimated aids enumerated in clauses (3) 
 28.11  and (4) that local governments will receive in the following 
 28.12  year.  ~~In the case of a county containing a city of the first~~ 
 28.13  ~~class, for taxes levied in 1991, and for all counties for taxes~~ 
 28.14  ~~levied in 1992 and thereafter,~~ The commissioner must certify 
 28.15  this amount by September 1.  
 28.16     Sec. 13.  Minnesota Statutes 1995 Supplement, section 
 28.17  473.253, subdivision 1, is amended to read: 
 28.18     Subdivision 1.  [SOURCES OF FUNDS.] The council shall 
 28.19  credit to the livable communities demonstration account the 
 28.20  revenues provided in this subdivision.  This tax shall be levied 
 28.21  and collected in the manner provided by section 473.13.  The 
 28.22  levy shall not exceed the following amount for the years 
 28.23  specified:  
 28.24     ~~(a)~~(1) for taxes payable in 1996, 50 percent of (i) the 
 28.25  metropolitan mosquito control commission's property tax levy for 
 28.26  taxes payable in 1995 multiplied by (ii) an index for market 
 28.27  valuation changes equal to the total market valuation of all 
 28.28  taxable property located within the metropolitan area for the 
 28.29  current taxes payable year divided by the total market valuation 
 28.30  of all taxable property located in the metropolitan area for the 
 28.31  previous taxes payable year; and 
 28.32     (2) for taxes payable in 1997 and subsequent years, the 
 28.33  product of (i) the property tax levy limit under this 
 28.34  subdivision for the previous year multiplied by (ii) an index 
 28.35  for market valuation changes equal to the total market valuation 
 28.36  of all taxable property located within the metropolitan area for 
 29.1   the current taxes payable year divided by the total market 
 29.2   valuation of all taxable property located in the metropolitan 
 29.3   area for the previous taxes payable year. 
 29.4      For the purposes of this subdivision, "total market 
 29.5   valuation" means the total market valuation of all taxable 
 29.6   property within the metropolitan area without valuation 
 29.7   adjustments for fiscal disparities under chapter 473F, tax 
 29.8   increment financing under sections 469.174 to 469.179, and high 
 29.9   voltage transmission lines under section 273.425. 
 29.10     ~~(b) The metropolitan council, for the purposes of the fund,~~ 
 29.11  ~~is considered a unique taxing jurisdiction for purposes of~~ 
 29.12  ~~receiving aid pursuant to section 273.1398.  For aid to be~~ 
 29.13  ~~received in 1996, the fund's homestead and agricultural credit~~ 
 29.14  ~~base shall equal 50 percent of the metropolitan mosquito control~~ 
 29.15  ~~commission's certified homestead and agricultural credit aid for~~ 
 29.16  ~~1995, determined under section 273.1398, subdivision 2, less any~~ 
 29.17  ~~permanent aid reduction under section 477A.0132.  For aid to be~~ 
 29.18  ~~received under section 273.1398 in 1997 and subsequent years,~~ 
 29.19  ~~the fund's homestead and agricultural credit base shall be~~ 
 29.20  ~~determined in accordance with section 273.1398, subdivision 1.~~ 
 29.21     Sec. 14.  Minnesota Statutes 1995 Supplement, section 
 29.22  473.711, subdivision 2, is amended to read: 
 29.23     Subd. 2.  [BUDGET; TAX LEVY.] (a) Budget.  The metropolitan 
 29.24  mosquito control commission shall prepare an annual budget.  The 
 29.25  budget may provide for expenditures in an amount not exceeding 
 29.26  the property tax levy limitation determined in this subdivision. 
 29.27     (b) Tax Levy.  The commission may levy a tax on all taxable 
 29.28  property in the district as defined in section 473.702 to 
 29.29  provide funds for the purposes of sections 473.701 to 473.716.  
 29.30  The tax shall not exceed the property tax levy limitation 
 29.31  determined in this subdivision.  A participating county may 
 29.32  agree to levy an additional tax to be used by the commission for 
 29.33  the purposes of sections 473.701 to 473.716 but the sum of the 
 29.34  county's and commission's taxes may not exceed the county's 
 29.35  proportionate share of the property tax levy limitation 
 29.36  determined under this subdivision based on the ratio of its 
 30.1   total net tax capacity to the total net tax capacity of the 
 30.2   entire district as adjusted by section 270.12, subdivision 3.  
 30.3   The auditor of each county in the district shall add the amount 
 30.4   of the levy made by the district to other taxes of the county 
 30.5   for collection by the county treasurer with other taxes.  When 
 30.6   collected, the county treasurer shall make settlement of the tax 
 30.7   with the district in the same manner as other taxes are 
 30.8   distributed to political subdivisions.  No county shall levy any 
 30.9   tax for mosquito, disease vectoring tick, and black gnat 
 30.10  (Simuliidae) control except under this section.  The levy shall 
 30.11  be in addition to other taxes authorized by law. 
 30.12     The property tax levied by the metropolitan mosquito 
 30.13  control commission shall not exceed the following amount for the 
 30.14  years specified: 
 30.15     (i) for taxes payable in 1996, the product of (1) the 
 30.16  commission's property tax levy limitation for taxes payable in 
 30.17  1995 determined under this subdivision minus 50 percent of the 
 30.18  amount actually levied for taxes payable in 1995, multiplied by 
 30.19  (2) an index for market valuation changes equal to the total 
 30.20  market valuation of all taxable property located within the 
 30.21  district for the current taxes payable year divided by the total 
 30.22  market valuation of all taxable property located within the 
 30.23  district for the previous taxes payable year; and 
 30.24     (ii) for taxes payable in 1997 and subsequent years, the 
 30.25  product of (1) the commission's property tax levy limitation for 
 30.26  the previous year determined under this subdivision multiplied 
 30.27  by (2) an index for market valuation changes equal to the total 
 30.28  market valuation of all taxable property located within the 
 30.29  district for the current taxes payable year divided by the total 
 30.30  market valuation of all taxable property located within the 
 30.31  district for the previous taxes payable year. 
 30.32     For the purpose of determining the commission's property 
 30.33  tax levy limitation under this subdivision, "total market 
 30.34  valuation" means the total market valuation of all taxable 
 30.35  property within the district without valuation adjustments for 
 30.36  fiscal disparities (chapter 473F), tax increment financing 
 31.1   (sections 469.174 to 469.179), and high voltage transmission 
 31.2   lines (section 273.425). 
 31.3      (c) ~~Homestead and Agricultural Credit Aid.  For aids~~ 
 31.4   ~~payable in 1996 and subsequent years, the commission's homestead~~ 
 31.5   ~~and agricultural credit aid base under section 273.1398,~~ 
 31.6   ~~subdivision 1, is permanently reduced by 50 percent of the~~ 
 31.7   ~~amount certified to be received in 1995, less any permanent aid~~ 
 31.8   ~~reduction in 1995 under section 477A.0132.~~ 
 31.9      ~~(d)~~ Emergency Tax Levy.  If the commissioner of the 
 31.10  department of health declares a health emergency due to a 
 31.11  threatened or actual outbreak of disease caused by mosquitos, 
 31.12  disease vectoring ticks, or black gnats (Simuliidae), the 
 31.13  commission may levy an additional tax not to exceed $500,000 on 
 31.14  all taxable property in the district to pay for the required 
 31.15  control measures. 
 31.16     ~~(e)~~ (d) Optional County Levy.  A participating county may 
 31.17  levy a tax in an amount to be determined by the county board for 
 31.18  mosquito, disease vectoring tick, and black gnat (Simuliidae) 
 31.19  nuisance control.  If the county levies the tax for nuisance 
 31.20  control, it must contract with the commission to provide for 
 31.21  nuisance control activities within the county.  The levy for 
 31.22  nuisance control shall be in addition to other levies authorized 
 31.23  by law to the county. 
 31.24     Sec. 15.  Minnesota Statutes 1994, section 477A.011, 
 31.25  subdivision 27, is amended to read: 
 31.26     Subd. 27.  [REVENUE BASE.] "Revenue base" means the amount 
 31.27  levied for taxes payable in the previous year, including the 
 31.28  levy on the fiscal disparity distribution under section 473F.08, 
 31.29  subdivision 3, paragraph (a), and before reduction for ~~the~~ 
 31.30  ~~homestead and agricultural credit~~ county program reform aid 
 31.31  under section ~~273.1398, subdivision 2~~ 477A.0123, equalization 
 31.32  aid under section 477A.013, subdivision 5, and disparity 
 31.33  reduction aid under section 273.1398, subdivision 3; plus the 
 31.34  originally certified local government aid in the previous year 
 31.35  under sections 477A.011, 477A.012, and 477A.013, except for 
 31.36  477A.013, subdivision 5; and the taconite aids received in the 
 32.1   previous year under sections 298.28 and 298.282. 
 32.2      Sec. 16.  [477A.0123] [COUNTY PROGRAM REFORM AID.] 
 32.3      Subdivision 1.  [PURPOSE.] County program aid is intended 
 32.4   to provide a financing source for the provision of property tax 
 32.5   relief in incorporated areas through the funding of program 
 32.6   mandates as defined in Minnesota Statutes 1994, section 3.881. 
 32.7      Subd. 2.  [AID ALLOCATION.] Each calendar year, the 
 32.8   commissioner of revenue shall distribute aid paid under this 
 32.9   section as follows:  For aid paid in 1997, each county's aid 
 32.10  distribution under this section shall equal its prior year 
 32.11  distribution under section 273.1398 plus the amount of the aid 
 32.12  reduction to counties under section 477A.0132, subdivision 1, 
 32.13  clause (a), adjusted for household growth as provided under 
 32.14  section 273.1398.  For aid paid in 1998 and thereafter, each 
 32.15  county shall receive a distribution equal to the aid amount it 
 32.16  received in the previous year adjusted for household growth as 
 32.17  provided under section 273.1398.  Aid paid under this section 
 32.18  shall be used to reduce county levies within incorporated areas 
 32.19  only. 
 32.20     Sec. 17.  Minnesota Statutes 1995 Supplement, section 
 32.21  477A.0132, subdivision 3, is amended to read: 
 32.22     Subd. 3.  [ORDER OF AID REDUCTIONS.] (a) The aid reduction 
 32.23  to a local government calculated under subdivisions 1, 
 32.24  paragraphs (a) and (c), and 2, paragraphs (a) and (c), is 
 32.25  applied to homestead and agricultural credit aid under section 
 32.26  273.1398 only. 
 32.27     (b) The aid reduction to a local government as calculated 
 32.28  under other paragraphs of subdivisions 1 and 2, is first applied 
 32.29  to its local government aid under sections 477A.012 and 477A.013 
 32.30  excluding aid under section 477A.013, subdivision 5; then, if 
 32.31  necessary, to its equalization aid under section 477A.013, 
 32.32  subdivision 5; then if necessary, to its ~~homestead and~~ 
 32.33  ~~agricultural credit~~ county program reform aid under section 
 32.34  ~~273.1398, subdivision 2~~ 477A.0123; and then, if necessary, to 
 32.35  its disparity reduction aid under section 273.1398, subdivision 
 32.36  3.  No aid payment may be less than $0.  Aid reductions under 
 33.1   this section in any given year shall be divided equally between 
 33.2   the July and December aid payments unless specified otherwise. 
 33.3      Sec. 18.  [REPEALER.] 
 33.4      Minnesota Statutes 1994, section 477A.013, subdivision 6, 
 33.5   is repealed. 
 33.6      Sec. 19.  [STUDY AND FINDINGS.] 
 33.7      The commissioner of revenue shall identify county program 
 33.8   mandates as defined in Minnesota Statutes 1994, section 3.881, 
 33.9   including, but not limited to, income maintenance 
 33.10  administration, correctional services, court system, and human 
 33.11  services including those provided to the developmentally 
 33.12  challenged and mentally ill, child protection services, and 
 33.13  services to families.  The commissioner's findings must include 
 33.14  the total program cost by county, the state share of these 
 33.15  program costs, if any, and the property tax levy by county 
 33.16  attributable to these program mandates.  The commissioner's 
 33.17  recommendations must also take into account the likely effect of 
 33.18  federal aid reductions on these program mandates and the likely 
 33.19  property tax consequences of these federal aid reductions. 
 33.20     Sec. 20.  [EFFECTIVE DATE.] 
 33.21     Sections 1 to 18 are effective for property taxes and aids 
 33.22  payable in 1997 and thereafter. 
 33.23                             ARTICLE 3 
 33.24                        LOCAL GOVERNMENT AID 
 33.25     Section 1.  Minnesota Statutes 1994, section 477A.011, is 
 33.26  amended by adding a subdivision to read: 
 33.27     Subd. 32a.  [POVERTY PERCENTAGE.] "Poverty percentage" for 
 33.28  a city is 100 times the ratio of the number of households below 
 33.29  the poverty line to the total number of households in the city 
 33.30  according to the most recent federal census. 
 33.31     Sec. 2.  Minnesota Statutes 1994, section 477A.011, is 
 33.32  amended by adding a subdivision to read: 
 33.33     Subd. 33a.  [SPRAWL AREA.] "Sprawl area" is the area of a 
 33.34  circle centered around a city's geographic center.  The radius 
 33.35  of the circle, in miles, is equal to the sum of (1) 3.5 and (2) 
 33.36  0.00004 times the city's 1990 population. 
 34.1      Sec. 3.  Minnesota Statutes 1994, section 477A.011, is 
 34.2   amended by adding a subdivision to read: 
 34.3      Subd. 33b.  [ADJUSTED POPULATION.] For a city with a 
 34.4   population of 5,000 or more which is located outside of the 
 34.5   metropolitan area, the "adjusted population" is equal to the 
 34.6   city's population plus the sum of the 1990 population, outside 
 34.7   of any city boundary, that is located within the sprawl area for 
 34.8   that city.  If two or more cities have overlapping sprawl areas, 
 34.9   the population in the overlapping area that is outside of any 
 34.10  city limits shall be divided between the cities based on each 
 34.11  city's 1990 population compared to the total population of the 
 34.12  affected cities.  For a city with a population less than 5,000 
 34.13  or a city located in the metropolitan area, adjusted population 
 34.14  is equal to the city's population. 
 34.15     Sec. 4.  Minnesota Statutes 1994, section 477A.011, is 
 34.16  amended by adding a subdivision to read: 
 34.17     Subd. 33c.  [CITY DECLINE FACTOR.] "City decline factor" 
 34.18  for a city is the product of the city's (1) pre-1940 housing 
 34.19  percentage, (2) commercial industrial percentage, and (3) 
 34.20  population decline percentage. 
 34.21     Sec. 5.  Minnesota Statutes 1994, section 477A.011, 
 34.22  subdivision 34, is amended to read: 
 34.23     Subd. 34.  [CITY REVENUE NEED.] (a) For a city with a 
 34.24  population equal to or greater than 2,500, "city revenue need" 
 34.25  is the sum of (1) ~~3.462312~~ 6.110762 times the pre-1940 housing 
 34.26  percentage; plus (2) ~~2.093826~~ 5.744915 times the commercial 
 34.27  industrial percentage; plus (3) ~~6.862552~~ 0.024686 times the 
 34.28  ~~population~~ city decline ~~percentage~~ factor; plus 
 34.29  (4) ~~.00026~~ 9.784552 times the ~~city population; plus (5) 152.0141~~ 
 34.30  poverty percentage. 
 34.31     (b) For a city with a population less than 2,500, "city 
 34.32  revenue need" is the sum of (1) 1.795919 times the pre-1940 
 34.33  housing percentage; plus (2) 1.562138 times the commercial 
 34.34  industrial percentage; plus (3) 4.177568 times the population 
 34.35  decline percentage; plus (4) 1.04013 times the transformed 
 34.36  population; minus (5) 107.475. 
 35.1      (c) The city revenue need cannot be less than zero. 
 35.2      (d) For calendar year 1995 and subsequent years, the city 
 35.3   revenue need for a city with a population less than 2,500, as 
 35.4   determined in paragraphs ~~(a) to~~ (b) and (c), is multiplied by 
 35.5   the ratio of the annual implicit price deflator for state and 
 35.6   local government purchases, as prepared by the United States 
 35.7   Department of Commerce, for the most recently available year to 
 35.8   the 1993 implicit price deflator for state and local government 
 35.9   purchases. 
 35.10     (e) For calendar year 1998 and subsequent years, the city 
 35.11  revenue need for a city with a population of 2,500 or more, as 
 35.12  determined in paragraphs (a) and (c), is multiplied by the ratio 
 35.13  of the annual implicit price deflator for state and local 
 35.14  government purchases, as prepared by the United States 
 35.15  Department of Commerce, for the most recent available year to 
 35.16  the 1996 implicit price deflator for state and local government 
 35.17  purchases. 
 35.18     Sec. 6.  Minnesota Statutes 1994, section 477A.013, 
 35.19  subdivision 8, is amended to read: 
 35.20     Subd. 8.  [CITY FORMULA AID.] In calendar year ~~1994~~ 1997 
 35.21  and subsequent years, the formula aid for a city is equal to the 
 35.22  product of (1) the need increase percentage ~~multiplied by the~~ 
 35.23  ~~difference between (1)~~ (2) the city's revenue need multiplied by 
 35.24  its adjusted population, and ~~(2) the city's net tax capacity~~ 
 35.25  ~~multiplied by the tax effort rate~~ (3) the square root of the 
 35.26  difference between (i) 4.14 and (ii) the ratio of the city's net 
 35.27  tax capacity to 215.06.  No city may have a formula aid amount 
 35.28  less than zero.  The need increase percentage must be the same 
 35.29  for all cities.  
 35.30     ~~Notwithstanding the prior sentence, in 1995 only, the need~~ 
 35.31  ~~increase percentage for a city shall be twice the need increase~~ 
 35.32  ~~percentage applicable to other cities if:~~  
 35.33     ~~(1) the city, in 1992 or 1993, transferred an amount from~~ 
 35.34  ~~governmental funds to their sewer and water fund, and~~ 
 35.35     ~~(2) the amount transferred exceeded their net levy for~~ 
 35.36  ~~taxes payable in the year in which the transfer occurred.~~ 
 36.1      The applicable need increase percentage ~~or percentages~~ must 
 36.2   be calculated by the department of revenue so that the total of 
 36.3   the aid under subdivision 9 equals the total amount available 
 36.4   for aid under section 477A.03.  
 36.5      Sec. 7.  Minnesota Statutes 1994, section 477A.013, 
 36.6   subdivision 9, is amended to read: 
 36.7      Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
 36.8   1994 and thereafter, each city shall receive an aid distribution 
 36.9   equal to ~~the sum of (1) the city formula aid under subdivision~~ 
 36.10  ~~8, and (2) its city aid base~~ its city formula aid, subject to 
 36.11  the limits in paragraphs (b), (c), (d), and (e). 
 36.12     (b) ~~The percentage increase for a first class city in~~ 
 36.13  ~~calendar year 1995 and thereafter shall not exceed the~~ 
 36.14  ~~percentage increase in the sum of the aid to all cities under~~ 
 36.15  ~~this section in the current calendar year compared to the sum of~~ 
 36.16  ~~the aid to all cities in the previous year.~~ 
 36.17     ~~(c)~~ The total aid for any city~~, except a first class city,~~ 
 36.18  shall not exceed the sum of (1) ~~ten~~ 17 percent of the city's net 
 36.19  levy for the year prior to the aid distribution plus (2) its 
 36.20  total aid in the previous year before any ~~increases or~~ decreases 
 36.21  under ~~sections 16A.711, subdivision 5, and~~ section 477A.0132. 
 36.22     ~~(d) Notwithstanding paragraph (c), in 1995 only, for cities~~ 
 36.23  ~~which in 1992 or 1993 transferred an amount from governmental~~ 
 36.24  ~~funds to their sewer and water fund in an amount greater than~~ 
 36.25  ~~their net levy for taxes payable in the year in which the~~ 
 36.26  ~~transfer occurred, the total aid shall not exceed the sum of (1)~~ 
 36.27  ~~20 percent of the city's net levy for the year prior to the aid~~ 
 36.28  ~~distribution plus (2) its total aid in the previous year before~~ 
 36.29  ~~any increases or decreases under sections 16A.711, subdivision~~ 
 36.30  ~~5, and 477A.0132.~~ 
 36.31     (c) Notwithstanding paragraphs (a), (b), (d), and (e), if a 
 36.32  city with a population of 2,500 or more has a reduction in its 
 36.33  net tax capacity of 20 percent or more in an assessment year 
 36.34  compared to the previous year, the following limits and minimums 
 36.35  shall apply: 
 36.36     (1) for aid distributed in the year immediately following 
 37.1   the assessment year of the net tax capacity loss, the aid may 
 37.2   not increase by more than an amount equal to the product of (i) 
 37.3   17 percent plus a percent equal to the percent loss in net tax 
 37.4   capacity and (ii) the city's net levy for the year prior to the 
 37.5   aid distribution; 
 37.6      (2) for aid distributed in the five years following the 
 37.7   assessment year of the net tax capacity loss, the aid may not be 
 37.8   less than an amount equal to the following: 
 37.9      (i) for the first year, the amount of the net tax capacity 
 37.10  loss multiplied by the city tax rate from the previous year; 
 37.11     (ii) for the second year, 80 percent of the minimum amount 
 37.12  guaranteed in the first year; 
 37.13     (iii) for the third year, 60 percent of the minimum amount 
 37.14  guaranteed in the first year; 
 37.15     (iv) for the fourth year, 40 percent of the minimum amount 
 37.16  guaranteed in the first year; 
 37.17     (v) for the fifth year, 20 percent of the minimum amount 
 37.18  guaranteed in the first year. 
 37.19     A city must notify the commissioner of revenue by July 1 of 
 37.20  the year prior to the first year it would qualify for provisions 
 37.21  under this paragraph in order to be eligible for aid adjustments 
 37.22  under this paragraph.  The city must also furnish the 
 37.23  commissioner with any information needed to administer the 
 37.24  provisions of this paragraph. 
 37.25     (d) The percentage increase for a city in calendar year 
 37.26  1997 shall not exceed 1-1/2 times the percentage increase in the 
 37.27  sum of the aid to all cities under this section in 1997 compared 
 37.28  to the sum of the aid to all cities in 1996.  The percentage 
 37.29  increase for a city in calendar year 1998 and thereafter shall 
 37.30  not exceed 1-1/4 times the percentage increase in the sum of the 
 37.31  aid to all cities under this section in the current calendar 
 37.32  year compared to the sum of the aid to all cities in the 
 37.33  previous year. 
 37.34     (e) No city shall receive total aid in any calendar year 
 37.35  that is less than 90 percent of its prior year aid. 
 37.36     Sec. 8.  Minnesota Statutes 1995 Supplement, section 
 38.1   477A.03, subdivision 2, is amended to read: 
 38.2      Subd. 2.  [ANNUAL APPROPRIATION.] A sum sufficient to 
 38.3   discharge the duties imposed by sections 477A.011 to 477A.014 is 
 38.4   annually appropriated from the general fund to the commissioner 
 38.5   of revenue.  For aids payable in ~~1996~~ 1997 and thereafter, the 
 38.6   total aids paid under sections ~~477A.013, subdivision 9,~~ 
 38.7   477A.0121 and 477A.0122 are the amounts certified to be paid in 
 38.8   the previous year, adjusted for inflation as provided under 
 38.9   subdivision 3.  Aid payments to ~~counties~~ cities under section 
 38.10  ~~477A.0121~~ 477A.013, subdivision 9, are limited to ~~$20,265,000 in~~ 
 38.11  ~~1996~~ $406,000,000 in 1997.  For aid payable in ~~1997~~ 1998 and 
 38.12  thereafter, the total aids paid under section ~~477A.0121~~ 
 38.13  477A.013, subdivision 9, are the amounts certified to be paid in 
 38.14  the previous year, adjusted for inflation as provided under 
 38.15  subdivision 3. 
 38.16     Sec. 9.  [REPEALER.] 
 38.17     Minnesota Statutes 1994, sections 477A.011, subdivisions 35 
 38.18  and 37; 477A.013, subdivision 6; and 477A.014, subdivision 1a; 
 38.19  and Minnesota Statutes 1995 Supplement, section 477A.011, 
 38.20  subdivision 36, are repealed. 
 38.21     Sec. 10.  [EFFECTIVE DATE.] 
 38.22     Sections 1 to 9 are effective for aids payable in 1997 and 
 38.23  thereafter. 
 38.24                             ARTICLE 4
 38.25               PROPERTY TAX REFUND AND RENTERS CREDIT
 38.26     Section 1.  Minnesota Statutes 1994, section 290A.04, 
 38.27  subdivision 2, is amended to read: 
 38.28     Subd. 2.  [HOMEOWNERS AND RENTERS.] A claimant whose 
 38.29  property taxes payable or rent constituting property taxes on 
 38.30  the claimant's homestead are in excess of the percentage of the 
 38.31  household income stated below shall pay an amount equal to the 
 38.32  percent of income shown for the appropriate household income 
 38.33  level along with the percent to be paid by the claimant of the 
 38.34  remaining amount of property taxes payable.  The state refund 
 38.35  equals the amount of property taxes payable that remain, up to 
 38.36  the state refund amount shown below.  
 39.1                         Percent           Percent    Maximum
 39.2   Household Income     of Income          Paid by      State
 39.3                                           Claimant     Refund
 39.4       ~~$0 to 1,029~~     ~~1.2 percent~~        ~~18 percent~~    ~~$440~~
 39.5    ~~1,030 to 2,059~~     ~~1.3 percent~~        ~~18 percent~~    ~~$440~~
 39.6    ~~2,060 to 3,099~~     ~~1.4 percent~~        ~~20 percent~~    ~~$440~~
 39.7    ~~3,100 to 4,129~~     ~~1.6 percent~~        ~~20 percent~~    ~~$440~~
 39.8    ~~4,130 to 5,159~~     ~~1.7 percent~~        ~~20 percent~~    ~~$440~~
 39.9    ~~5,160 to 7,229~~     ~~1.9 percent~~        ~~25 percent~~    ~~$440~~
 39.10   ~~7,230 to 8,259~~     ~~2.1 percent~~        ~~25 percent~~    ~~$440~~
 39.11   ~~8,260 to 9,289~~     ~~2.2 percent~~        ~~25 percent~~    ~~$440~~
 39.12   ~~9,290 to 10,319~~    ~~2.3 percent~~        ~~30 percent~~    ~~$440~~
 39.13  ~~10,320 to 11,349~~    ~~2.4 percent~~        ~~30 percent~~    ~~$440~~
 39.14  ~~11,350 to 12,389~~    ~~2.5 percent~~        ~~30 percent~~    ~~$440~~
 39.15  ~~12,390 to 14,449~~    ~~2.6 percent~~        ~~30 percent~~    ~~$440~~
 39.16  ~~14,450 to 15,479~~    ~~2.8 percent~~        ~~35 percent~~    ~~$440~~
 39.17  ~~15,480 to 16,509~~    ~~3.0 percent~~        ~~35 percent~~    ~~$440~~
 39.18  ~~16,510 to 17,549~~    ~~3.2 percent~~        ~~40 percent~~    ~~$440~~
 39.19  ~~17,550 to 21,669~~    ~~3.3 percent~~        ~~40 percent~~    ~~$440~~
 39.20  ~~21,670 to 24,769~~    ~~3.4 percent~~        ~~45 percent~~    ~~$440~~
 39.21  ~~24,770 to 30,959~~    ~~3.5 percent~~        ~~45 percent~~    ~~$440~~
 39.22  ~~30,960 to 36,119~~    ~~3.5 percent~~        ~~45 percent~~    ~~$440~~
 39.23  ~~36,120 to 41,279~~    ~~3.7 percent~~        ~~50 percent~~    ~~$440~~
 39.24  ~~41,280 to 58,829~~    ~~4.0 percent~~        ~~50 percent~~    ~~$440~~
 39.25  ~~58,830 to 59,859~~    ~~4.0 percent~~        ~~50 percent~~    ~~$310~~
 39.26  ~~59,860 to 60,889~~    ~~4.0 percent~~        ~~50 percent~~    ~~$210~~
 39.27  ~~60,890 to 61,929~~    ~~4.0 percent~~        ~~50 percent~~    ~~$100~~ 
 39.28      $0 to 1,059     0.50 percent       1.0 percent   $2,000
 39.29   1,060 to 2,119     0.50 percent       2.0 percent   $2,000
 39.30   2,120 to 3,189     0.50 percent       3.0 percent   $2,000
 39.31   3,190 to 4,249     0.50 percent       4.0 percent   $2,000
 39.32   4,250 to 5,309     0.50 percent       5.0 percent   $2,000
 39.33   5,310 to 7,439     0.50 percent       6.0 percent   $2,000
 39.34   7,440 to 8,499     0.50 percent       7.0 percent   $2,000
 39.35   8,500 to 9,549     0.50 percent       8.0 percent   $2,000
 39.36   9,550 to 10,609    0.50 percent       9.0 percent   $2,000
 39.37  10,610 to 12,739    0.60 percent      10.0 percent   $2,000
 39.38  12,740 to 14,859    0.60 percent      11.0 percent   $2,000
 39.39  14,860 to 16,979    0.70 percent      12.0 percent   $2,000
 39.40  16,980 to 18,049    0.80 percent      13.0 percent   $2,000
 39.41  18,050 to 19,999    0.90 percent      14.0 percent   $2,000
 39.42  20,000 to 23,999    1.00 percent      15.0 percent   $2,000
 39.43  24,000 to 27,999    1.20 percent      17.0 percent   $2,000
 39.44  28,000 to 29,999    1.40 percent      19.0 percent   $2,000
 39.45  30,000 to 34,999    1.50 percent      20.0 percent   $2,000
 39.46  35,000 to 39,999    1.75 percent      22.0 percent   $2,000
 39.47  40,000 to 42,449    2.00 percent      25.0 percent   $1,900
 39.48  42,450 to 44,999    2.25 percent      27.0 percent   $1,800
 39.49  45,000 to 47,499    2.50 percent      30.0 percent   $1,700
 39.50  47,500 to 49,999    2.75 percent      32.0 percent   $1,600
 39.51  50,000 to 54,999    3.00 percent      35.0 percent   $1,500
 39.52  55,000 to 59,999    3.25 percent      37.0 percent   $1,400
 39.53  60,000 to 64,999    3.50 percent      40.0 percent   $1,300
 39.54  65,000 to 69,999    3.75 percent      42.0 percent   $1,200
 39.55  70,000 to 74,999    4.00 percent      45.0 percent   $1,100
 39.56     The payment made to a claimant shall be the amount of the 
 39.57  state refund calculated under this subdivision.  No payment is 
 39.58  allowed if the claimant's household income is ~~$61,930~~ $75,000 or 
 39.59  more. 
 39.60     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 39.61  290A.04, subdivision 6, is amended to read: 
 39.62     Subd. 6.  [INFLATION ADJUSTMENT.] Beginning for property 
 40.1   tax refunds payable in calendar year ~~1996~~ 1998, the commissioner 
 40.2   shall annually adjust the dollar amounts of the income 
 40.3   thresholds and the maximum refunds under 
 40.4   ~~subdivisions~~ subdivision 2 ~~and 2a~~ for inflation.  The 
 40.5   commissioner shall make the inflation adjustments in accordance 
 40.6   with section 290.06, subdivision 2d, except that for purposes of 
 40.7   this subdivision the percentage increase shall be determined 
 40.8   from the year ending on August 31, ~~1994~~ 1996, to the year ending 
 40.9   on August 31 of the year preceding that in which the refund is 
 40.10  payable.  The commissioner shall use the appropriate percentage 
 40.11  increase to annually adjust the income thresholds and maximum 
 40.12  refunds under ~~subdivisions~~ subdivision 2 ~~and 2a~~ for inflation 
 40.13  without regard to whether or not the income tax brackets are 
 40.14  adjusted for inflation in that year.  The commissioner shall 
 40.15  round the thresholds and the maximum amounts, as adjusted to the 
 40.16  nearest $10 amount.  If the amount ends in $5, the commissioner 
 40.17  shall round it up to the next $10 amount.  
 40.18     The commissioner shall annually announce the adjusted 
 40.19  refund schedule at the same time provided under section 290.06.  
 40.20  The determination of the commissioner under this subdivision is 
 40.21  not a rule under the administrative procedure act. 
 40.22     Sec. 3.  [REPEALER.] 
 40.23     Minnesota Statutes 1994, sections 290A.04, subdivisions 2a 
 40.24  and 2b; and 290A.23, subdivision 1, are repealed. 
 40.25     Sec. 4.  [EFFECTIVE DATE.] 
 40.26     Sections 1 to 3 are effective for property taxes payable in 
 40.27  1997 and rents payable in 1996. 
 40.28                             ARTICLE 5
 40.29                      SALES AND USE TAX REFORM 
 40.30     Section 1.  [290.0692] [REFUNDABLE SALES TAX CREDIT.] 
 40.31     Subdivision 1.  [CREDIT ALLOWED.] For each taxable year, an 
 40.32  individual may claim a credit against the tax imposed by this 
 40.33  chapter equal to $25 multiplied by each exemption for the 
 40.34  taxpayer, spouse, and each dependent of the taxpayer.  The 
 40.35  maximum allowable credit is $150.  For married individuals 
 40.36  filing separately, the maximum allowable credit is $75. 
 41.1      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 41.2   the following terms have the meanings given. 
 41.3      (b) "Exemption" means an exemption allowed under section 
 41.4   151 of the Internal Revenue Code. 
 41.5      (c) "Income" means income as defined in section 290.067, 
 41.6   subdivision 2a. 
 41.7      (d) "Taxpayer" excludes one who is claimed as a dependent 
 41.8   on another's federal income tax return or who would qualify to 
 41.9   be claimed as a dependent on the tax return of another, 
 41.10  regardless of whether a return was filed. 
 41.11     Subd. 3.  [INCOME PHASE-OUT.] The amount of the credit is 
 41.12  reduced by five percentage points for each $500 or part of $500 
 41.13  of income above $15,000.  No credit is allowed if income exceeds 
 41.14  $25,000. 
 41.15     Subd. 4.  [CREDIT REFUNDABLE.] If the amount of the credit 
 41.16  exceeds the taxpayer's liability under this chapter, the 
 41.17  commissioner shall refund the excess to the taxpayer. 
 41.18     Subd. 5.  [INFLATION ADJUSTMENT.] The commissioner shall 
 41.19  adjust the dollar amounts in subdivisions 1 and 3 for inflation, 
 41.20  using the percentage determined under section 290.06, 
 41.21  subdivision 2d, for the taxable year. 
 41.22     Subd. 6.  [APPROPRIATION.] An amount sufficient to pay 
 41.23  refunds under this section is appropriated to the commissioner. 
 41.24     Sec. 2.  Minnesota Statutes 1994, section 297A.01, 
 41.25  subdivision 16, is amended to read: 
 41.26     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
 41.27  machinery and equipment purchased or leased for use in this 
 41.28  state and used by the purchaser or lessee primarily for 
 41.29  manufacturing, fabricating, mining, or refining tangible 
 41.30  personal property to be sold ultimately at retail and for 
 41.31  electronically transmitting results retrieved by a customer of 
 41.32  an on-line computerized data retrieval system.  
 41.33     (b) Capital equipment includes all machinery and equipment 
 41.34  that is essential to the integrated production process.  Capital 
 41.35  equipment includes, but is not limited to: 
 41.36     (1) machinery and equipment used or required to operate, 
 42.1   control, or regulate the production equipment; 
 42.2      (2) machinery and equipment used for research and 
 42.3   development, design, quality control, and testing activities; 
 42.4      (3) environmental control devices that are used to maintain 
 42.5   conditions such as temperature, humidity, light, or air pressure 
 42.6   when those conditions are essential to and are part of the 
 42.7   production process; ~~or~~ 
 42.8      (4) materials and supplies necessary to construct and 
 42.9   install machinery or equipment; and 
 42.10     (5) pollution control equipment. 
 42.11     (c) Capital equipment does not include the following: 
 42.12     (1) ~~repair or replacement parts, including accessories,~~ 
 42.13  ~~whether purchased as spare parts, repair parts, or as upgrades~~ 
 42.14  ~~or modifications, and whether purchased before or after the~~ 
 42.15  ~~machinery or equipment is placed into service.  Parts or~~ 
 42.16  ~~accessories are treated as capital equipment only to the extent~~ 
 42.17  ~~that they are a part of and are essential to the operation of~~ 
 42.18  ~~the machinery or equipment as initially purchased;~~ 
 42.19     ~~(2)~~ motor vehicles taxed under chapter 297B; 
 42.20     ~~(3)~~ (2) machinery or equipment used to receive or store raw 
 42.21  materials; 
 42.22     ~~(4)~~ (3) building materials; 
 42.23     ~~(5)~~ (4) machinery or equipment used for nonproduction 
 42.24  purposes, including, but not limited to, the following:  
 42.25  machinery and equipment used for plant security, fire 
 42.26  prevention, first aid, and hospital stations; machinery and 
 42.27  equipment used in support operations or for administrative 
 42.28  purposes; machinery and equipment used solely for pollution 
 42.29  control, prevention, or abatement; and machinery and equipment 
 42.30  used in plant cleaning, disposal of scrap and waste, plant 
 42.31  communications, space heating, lighting, or safety; or 
 42.32     ~~(6) "farm machinery" as defined by subdivision 15,~~ 
 42.33  ~~"aquaculture production equipment" as defined by subdivision 19,~~ 
 42.34  ~~and "replacement capital equipment" as defined by subdivision~~ 
 42.35  ~~20; or~~ 
 42.36     ~~(7)~~ (5) any other item that is not essential to the 
 43.1   integrated process of manufacturing, fabricating, mining, or 
 43.2   refining. 
 43.3      (d) For purposes of this subdivision: 
 43.4      (1) "Equipment" means independent devices or tools separate 
 43.5   from machinery but essential to an integrated production 
 43.6   process, including computers and software, used in operating 
 43.7   machinery and equipment; and any subunit or assembly comprising 
 43.8   a component of any machinery or accessory or attachment parts of 
 43.9   machinery, such as tools, dies, jigs, patterns, and molds. 
 43.10     (2) "Fabricating" means to make, build, create, produce, or 
 43.11  assemble components or property to work in a new or different 
 43.12  manner. 
 43.13     (3) "Machinery" means mechanical, electronic, or electrical 
 43.14  devices, including computers and software, that are purchased or 
 43.15  constructed to be used for the activities set forth in paragraph 
 43.16  (a), beginning with the removal of raw materials from inventory 
 43.17  through the completion of the product, including packaging of 
 43.18  the product. 
 43.19     (4) "Manufacturing" means an operation or series of 
 43.20  operations where raw materials are changed in form, composition, 
 43.21  or condition by machinery and equipment and which results in the 
 43.22  production of a new article of tangible personal property.  For 
 43.23  purposes of this subdivision, "manufacturing" includes the 
 43.24  generation of electricity or steam to be sold at retail. 
 43.25     (5) "Mining" means the extraction of minerals, ores, stone, 
 43.26  and peat. 
 43.27     (6) "On-line data retrieval system" means a system whose 
 43.28  cumulation of information is equally available and accessible to 
 43.29  all its customers. 
 43.30     (7) "Pollution control equipment" means machinery and 
 43.31  equipment used to eliminate, prevent, or reduce pollution 
 43.32  resulting from an activity described in paragraph (a). 
 43.33     (8) "Primarily" means machinery and equipment used 50 
 43.34  percent or more of the time in an activity described in 
 43.35  paragraph (a). 
 43.36     (9) "Refining" means the process of converting a natural 
 44.1   resource to a product, including the treatment of water to be 
 44.2   sold at retail. 
 44.3      ~~(e) For purposes of this subdivision the requirement that~~ 
 44.4   ~~the machinery or equipment "must be used by the purchaser or~~ 
 44.5   ~~lessee" means that the person who purchases or leases the~~ 
 44.6   ~~machinery or equipment must be the one who uses it for the~~ 
 44.7   ~~qualifying purpose.  When a contractor buys and installs~~ 
 44.8   ~~machinery or equipment as part of an improvement to real~~ 
 44.9   ~~property, only the contractor is considered the purchaser.~~ 
 44.10     ~~(f) Notwithstanding prior provisions of this subdivision,~~ 
 44.11  ~~machinery and equipment purchased or leased to replace machinery~~ 
 44.12  ~~and equipment used in the mining or production of taconite shall~~ 
 44.13  ~~qualify as capital equipment.~~ 
 44.14     Sec. 3.  Minnesota Statutes 1994, section 297A.15, 
 44.15  subdivision 5, is amended to read: 
 44.16     Subd. 5.  [REFUND; APPROPRIATION.] Notwithstanding the 
 44.17  provisions of ~~sections 297A.02, subdivision 5, and~~ section 
 44.18  297A.25, ~~subdivisions 42 and~~ subdivision 50, the tax on sales of 
 44.19  ~~capital equipment, replacement capital equipment, and~~ 
 44.20  construction materials and supplies under section 297A.25, 
 44.21  subdivision 50, shall be imposed and collected as if the rates 
 44.22  under sections 297A.02, subdivision 1, and 297A.021, applied.  
 44.23  Upon application by the purchaser, on forms prescribed by the 
 44.24  commissioner, a refund equal to the reduction in the tax due as 
 44.25  a result of the application of the exemption under section 
 44.26  297A.25, subdivision ~~42 or~~ 50, ~~and the rates under sections~~ 
 44.27  ~~297A.02, subdivision 5, and 297A.021~~ shall be paid to the 
 44.28  purchaser.  ~~In the case of building materials qualifying under~~ 
 44.29  ~~section 297A.25, subdivision 50,~~ Where the tax was paid by a 
 44.30  contractor, application must be made by the owner for the sales 
 44.31  tax paid by all the contractors, subcontractors, and builders 
 44.32  for the project.  The application must include sufficient 
 44.33  information to permit the commissioner to verify the sales tax 
 44.34  paid for the project.  The application shall include information 
 44.35  necessary for the commissioner initially to verify that the 
 44.36  purchases qualified as ~~capital equipment under section 297A.25,~~ 
 45.1   ~~subdivision 42, replacement capital equipment under section~~ 
 45.2   ~~297A.01, subdivision 20, or capital equipment or~~ construction 
 45.3   materials and supplies under section 297A.25, subdivision 50.  
 45.4   No more than two applications for refunds may be filed under 
 45.5   this subdivision in a calendar year.  ~~No owner may apply for a~~ 
 45.6   ~~refund based on the exemption under section 297A.25, subdivision~~ 
 45.7   ~~50, before July 1, 1993.~~  Unless otherwise specifically provided 
 45.8   by this subdivision, the provisions of section 289A.40 apply to 
 45.9   the refunds payable under this subdivision.  There is annually 
 45.10  appropriated to the commissioner of revenue the amount required 
 45.11  to make the refunds. 
 45.12     The amount to be refunded shall bear interest at the rate 
 45.13  in section 270.76 from the date the refund claim is filed with 
 45.14  the commissioner. 
 45.15     Sec. 4.  Minnesota Statutes 1994, section 297A.25, 
 45.16  subdivision 8, is amended to read: 
 45.17     Subd. 8.  [USED CLOTHING; SEWING MATERIALS.] The gross 
 45.18  receipts from the sale of used clothing and used wearing apparel 
 45.19  are exempt, except the following: 
 45.20     (1) all articles commonly or commercially known as jewelry, 
 45.21  whether real or imitation; pearls, precious and semiprecious 
 45.22  stones, and imitations thereof; articles made of, or ornamented, 
 45.23  mounted or fitted with precious metals or imitations thereof; 
 45.24  watches; clocks; cases and movements for watches and clocks; 
 45.25  gold, gold-plated, silver, or sterling flatware or hollowware 
 45.26  and silver-plated hollowware; opera glasses; lorgnettes; marine 
 45.27  glasses; field glasses and binoculars; 
 45.28     (2) articles made of fur on the hide or pelt, and articles 
 45.29  of which such fur is the component material or chief value, but 
 45.30  only if such value is more than three times the value of the 
 45.31  next most valuable component material; 
 45.32     (3) perfume, essences, extracts, toilet waters, cosmetics, 
 45.33  petroleum jellies, hair oils, pomades, hair dressings, hair 
 45.34  restoratives, hair dyes, aromatic cachous and toilet powders.  
 45.35  The tax imposed by this chapter shall not apply to lotion, oil, 
 45.36  powder, or other articles intended to be used or applied only in 
 46.1   the case of babies; 
 46.2      (4) trunks, valises, traveling bags, suitcases, satchels, 
 46.3   overnight bags, hat boxes for use by travelers, beach bags, 
 46.4   bathing suit bags, brief cases made of leather or imitation 
 46.5   leather, salespeople's sample and display cases, purses, 
 46.6   handbags, pocketbooks, wallets, billfolds, card, pass, and key 
 46.7   cases and toilet cases. 
 46.8      The gross receipts from the sale of materials used for the 
 46.9   sewing of clothing, including fabric, thread, yarn, zippers, 
 46.10  buttons, and similar items which are to be directly incorporated 
 46.11  into wearing apparel, are exempt. 
 46.12     Sec. 5.  Minnesota Statutes 1995 Supplement, section 
 46.13  297A.25, subdivision 59, is amended to read: 
 46.14     Subd. 59.  [FARM MACHINERY.] ~~From July 1, 1994, until June~~ 
 46.15  ~~30, 1996,~~ The gross receipts from the sale of used farm 
 46.16  machinery are exempt. 
 46.17     Sec. 6.  [REPEALER.] 
 46.18     Minnesota Statutes 1994, sections 297A.01, subdivisions 17 
 46.19  and 20; 297A.02, subdivisions 2 and 5; and 297A.25, subdivision 
 46.20  53, are repealed. 
 46.21     Sec. 7.  [EFFECTIVE DATE.] 
 46.22     Section 1 is effective for taxable years beginning after 
 46.23  December 31, 1996.  The first inflation adjustment under section 
 46.24  1, subdivision 6, must be made for the taxable years beginning 
 46.25  after December 31, 1997.  Sections 2, 3, and 6 are effective for 
 46.26  sales made after July 1, 1997.  Section 4 is effective for sales 
 46.27  on or after June 1, 1997. 
 46.28                             ARTICLE 6
 46.29                           EDUCATION AIDS 
 46.30     Section 1.  Minnesota Statutes 1995 Supplement, section 
 46.31  124.226, subdivision 10, is amended to read: 
 46.32     Subd. 10.  [TARGETED NEEDS TRANSPORTATION LEVY.] A school 
 46.33  district may make a levy for targeted needs transportation costs 
 46.34  according to this subdivision.  The amount of the levy shall be 
 46.35  the result of the following computation: 
 46.36     (1) For fiscal year 1997 and later, targeted needs 
 47.1   transportation levy equalization revenue equals 28 percent of 
 47.2   the sum of the district's special programs transportation 
 47.3   revenue under section 124.225, subdivision 14, and the 
 47.4   district's integration transportation revenue under section 
 47.5   124.225, subdivision 15. 
 47.6      (2) The targeted needs transportation levy equals the 
 47.7   result in clause (1) times the lesser of one or the ratio of (i) 
 47.8   the quotient derived by dividing the adjusted net tax capacity 
 47.9   of the district for the year before the year the levy is 
 47.10  certified by the actual pupil units in the district for the 
 47.11  school year to which the levy is attributable, to (ii) 
 47.12  ~~$3,540~~ $3,440. 
 47.13     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 47.14  124.2711, subdivision 2a, is amended to read: 
 47.15     Subd. 2a.  [EARLY CHILDHOOD FAMILY EDUCATION LEVY.] To 
 47.16  obtain early childhood family education revenue, a district may 
 47.17  levy an amount equal to the tax rate of ~~.609~~ .627 percent times 
 47.18  the adjusted tax capacity of the district for the year preceding 
 47.19  the year the levy is certified.  If the amount of the early 
 47.20  childhood family education levy would exceed the early childhood 
 47.21  family education revenue, the early childhood family education 
 47.22  levy shall equal the early childhood family education revenue. 
 47.23     Sec. 3.  Minnesota Statutes 1994, section 124.2716, 
 47.24  subdivision 3, is amended to read: 
 47.25     Subd. 3.  [EXTENDED DAY LEVY.] To obtain extended day 
 47.26  revenue, a school district may levy an amount equal to the 
 47.27  district's extended day revenue as defined in subdivision 2 
 47.28  multiplied by the lesser of one, or the ratio of the quotient 
 47.29  derived by dividing the adjusted net tax capacity of the 
 47.30  district for the year before the year the levy is certified by 
 47.31  the actual pupil units in the district for the school year to 
 47.32  which the levy is attributable, to ~~$3,700~~ $3,595.  
 47.33     Sec. 4.  Minnesota Statutes 1994, section 124.2727, 
 47.34  subdivision 6b, is amended to read: 
 47.35     Subd. 6b.  [DISTRICT COOPERATION LEVY.] To receive district 
 47.36  cooperation revenue, a district may levy an amount equal to the 
 48.1   district's cooperation revenue multiplied by the lesser of one, 
 48.2   or the ratio of the quotient derived by dividing the adjusted 
 48.3   net tax capacity of the district for the year preceding the year 
 48.4   the levy is certified by the actual pupil units in the district 
 48.5   for the school year to which the levy is attributable 
 48.6   to ~~$3,500~~ $3,400. 
 48.7      Sec. 5.  Minnesota Statutes 1995 Supplement, section 
 48.8   124.83, subdivision 4, is amended to read: 
 48.9      Subd. 4.  [HEALTH AND SAFETY LEVY.] To receive health and 
 48.10  safety revenue, a district may levy an amount equal to the 
 48.11  district's health and safety revenue as defined in subdivision 3 
 48.12  multiplied by the lesser of one, or the ratio of the quotient 
 48.13  derived by dividing the adjusted net tax capacity of the 
 48.14  district for the year preceding the year the levy is certified 
 48.15  by the actual pupil units in the district for the school year to 
 48.16  which the levy is attributable, to ~~$4,707.50~~ $4,575. 
 48.17     Sec. 6.  Minnesota Statutes 1995 Supplement, section 
 48.18  124.95, subdivision 4, is amended to read: 
 48.19     Subd. 4.  [EQUALIZED DEBT SERVICE LEVY.] To obtain debt 
 48.20  service equalization revenue, a district must levy an amount not 
 48.21  to exceed the district's debt service equalization revenue times 
 48.22  the lesser of one or the ratio of: 
 48.23     (1) the quotient derived by dividing the adjusted net tax 
 48.24  capacity of the district for the year before the year the levy 
 48.25  is certified by the actual pupil units in the district for the 
 48.26  school year ending in the year prior to the year the levy is 
 48.27  certified; to 
 48.28     (2) ~~$4,707.50~~ $4,575. 
 48.29     Sec. 7.  Minnesota Statutes 1995 Supplement, section 
 48.30  124A.23, subdivision 1, is amended to read: 
 48.31     Subdivision 1.  [GENERAL EDUCATION TAX RATE.] The 
 48.32  commissioner shall establish the general education tax rate by 
 48.33  July 1 of each year for levies payable in the following year.  
 48.34  The general education tax capacity rate shall be a rate, rounded 
 48.35  up to the nearest tenth of a percent, that, when applied to the 
 48.36  adjusted net tax capacity for all districts, raises the amount 
 49.1   specified in this subdivision.  The general education tax rate 
 49.2   shall be the rate that raises ~~$1,054,000,000 for fiscal year~~ 
 49.3   ~~1996 and~~ $1,359,000,000 for fiscal year 1997 and $1,003,000,000 
 49.4   for fiscal year 1998 and later fiscal years.  The general 
 49.5   education tax rate may not be changed due to changes or 
 49.6   corrections made to a district's adjusted net tax capacity after 
 49.7   the tax rate has been established.  
 49.8      Sec. 8.  [APPROPRIATION.] 
 49.9      $....... is appropriated to the commissioner of children, 
 49.10  families, and learning in fiscal year 1997 for additional state 
 49.11  aid costs associated with changes in school levy revenues 
 49.12  recognized under Minnesota Statutes, section 121.904, 
 49.13  subdivision 4a, as the result of the levy changes due to section 
 49.14  7. 
 49.15     Sec. 9.  [EFFECTIVE DATE.] 
 49.16     Sections 1 to 7 are effective for property taxes payable in 
 49.17  1997 and thereafter. 
 49.18                             ARTICLE 7
 49.19                       BUSINESS ACTIVITY TAX
 49.20     Section 1.  Minnesota Statutes 1994, section 290.06, 
 49.21  subdivision 1, is amended to read: 
 49.22     Subdivision 1.  [COMPUTATION, CORPORATIONS.] The franchise 
 49.23  tax imposed upon corporations shall be computed by applying to 
 49.24  their taxable income the rate of ~~9.8~~ 7.5 percent. 
 49.25     Sec. 2.  [290.9401] [BAT IMPOSED.] 
 49.26     In addition to the taxes imposed by this chapter, a tax of 
 49.27  .. percent applies to a firm's tax base. 
 49.28     Sec. 3.  [290.9402] [DEFINITIONS.] 
 49.29     Subdivision 1.  [SCOPE.] For purposes of sections 3 to 8, 
 49.30  the following terms have the meanings given. 
 49.31     Subd. 2.  [BUSINESS ACTIVITY.] "Business activity" means 
 49.32  sale or rental of property or the performance of services in 
 49.33  this state to realize a gain, benefit, or advantage, whether 
 49.34  direct or indirect.  Business activity includes activity in 
 49.35  intrastate, interstate, and foreign commerce.  It does not 
 49.36  include services provided by an employee to the employee's 
 50.1   employer, service as the director of a corporation, or a casual 
 50.2   transaction.  Although an activity may be incidental to another 
 50.3   of the firm's business activities, each activity is a business 
 50.4   activity for purposes of the tax. 
 50.5      Subd. 3.  [BUSINESS INCOME.] "Business income" means net 
 50.6   income.  For a firm other than a corporation, net income is 
 50.7   limited to the portion derived from business activity. 
 50.8      Subd. 4.  [CASUAL TRANSACTION.] "Casual transaction" means 
 50.9   a transaction that (1) is not made in the ordinary course of 
 50.10  repeated or successive transactions of a like character by the 
 50.11  firm, and (2) is not incidental to the firm's regular business 
 50.12  activity. 
 50.13     Subd. 5.  [COMPENSATION.] (a) "Compensation" means all 
 50.14  payments made to or for the benefit of employees, officers, or 
 50.15  directors of the firm. 
 50.16     (b) Compensation specifically includes, but is not limited 
 50.17  to: 
 50.18     (1) wages, salaries, bonuses, commissions, and other 
 50.19  payments to employees, officers, or directors; 
 50.20     (2) payments to state and federal unemployment compensation 
 50.21  funds; 
 50.22     (3) payments, including self-insurance, for workers' 
 50.23  compensation; 
 50.24     (4) payments to individuals not currently working; 
 50.25     (5) payments to dependents and heirs of individuals because 
 50.26  of current or past labor service provided by those individuals; 
 50.27     (6) payments to a pension, retirement, profit-sharing, or 
 50.28  deferred compensation program; 
 50.29     (7) payments for insurance, including self-insurance, for 
 50.30  which employees are beneficiaries, including payments for health 
 50.31  and welfare and noninsured benefit plans and payment of fees for 
 50.32  administration of plans. 
 50.33     (c) Compensation does not include: 
 50.34     (1) discounts on the price of the firm's merchandise or 
 50.35  services sold to employees, officers, or directors which are not 
 50.36  available to other customers; or 
 51.1      (2) payments to independent contractors. 
 51.2      Subd. 6.  [FIRM.] "Firm" means a corporation, individual, 
 51.3   partnership, limited liability company, trust, nonprofit 
 51.4   corporation, joint venture, association, receiver, estate, or 
 51.5   other person engaged in business activity. 
 51.6      Subd. 7.  [PROPERTY.] "Property" includes all property, 
 51.7   whether tangible or intangible, or whether real, personal, or 
 51.8   mixed. 
 51.9      Sec. 4.  [290.9403] [BUSINESSES SUBJECT TO TAX.] 
 51.10     Subdivision 1.  [TAXABLE BUSINESSES.] The tax imposed by 
 51.11  sections 2 to 8 applies to a firm engaged in business activity 
 51.12  in Minnesota, unless an exemption under subdivisions 2 to 4 
 51.13  applies. 
 51.14     Subd. 2.  [FOREIGN INSURANCE COMPANIES.] An insurance 
 51.15  company as defined in section 290.05, subdivision 1, clause (c), 
 51.16  is exempt. 
 51.17     Subd. 3.  [GOVERNMENT ENTITIES.] A governmental entity, as 
 51.18  defined in section 290.05, subdivision 1, clause (b), is exempt. 
 51.19     Subd. 4.  [OTHER EXEMPT ENTITIES.] An organization exempt 
 51.20  from taxation under Subchapter F of the Internal Revenue Code is 
 51.21  exempt, except to the extent of tax base from activities 
 51.22  generating: 
 51.23     (1) unrelated business income, as defined in sections 511 
 51.24  to 515 of the Internal Revenue Code; 
 51.25     (2) taxable income of farmers cooperatives under section 
 51.26  521 of the Internal Revenue Code; 
 51.27     (3) taxable income of political organizations under section 
 51.28  527 of the Internal Revenue Code; and 
 51.29     (4) taxable income of homeowners associations under section 
 51.30  528 of the Internal Revenue Code. 
 51.31     Sec. 5.  [290.9404] [TAX BASE.] 
 51.32     Subdivision 1.  [GENERAL RULE.] The tax base of a firm for 
 51.33  the taxable year equals the sum of the firm's business income 
 51.34  and the amounts in subdivision 2, less 
 51.35     (1) the amounts in subdivision 3, 
 51.36     (2) the capital acquisition deduction under subdivision 4, 
 52.1   and 
 52.2      (3) the exemption amount under subdivision 5. 
 52.3      All amounts are the amounts paid or accrued for the taxable 
 52.4   year under the firm's method of accounting for federal income 
 52.5   tax purposes. 
 52.6      Subd. 2.  [ADDITIONS.] The following amounts are added to 
 52.7   business income to determine tax base: 
 52.8      (1) the amount of the additions to federal taxable income 
 52.9   under section 290.01, subdivision 19c, clauses (1), (2), (3), 
 52.10  (4), (5), (8), (10), and (11); 
 52.11     (2) the amount of the following, to the extent deducted or 
 52.12  excluded in computing federal taxable income and not added under 
 52.13  clause (1): 
 52.14     (i) depreciation, amortization, or immediate or accelerated 
 52.15  write-off of the cost of tangible assets, 
 52.16     (ii) royalties, 
 52.17     (iii) dividends, except dividends representing reduction of 
 52.18  premiums to policyholders of insurance companies, and 
 52.19     (iv) interest including amounts paid, credited, or reserved 
 52.20  by insurance companies as amounts necessary to fulfill the 
 52.21  policy and other contract liability requirements of sections 805 
 52.22  and 809 of the Internal Revenue Code; 
 52.23     (3) the amount of compensation; and 
 52.24     (4) capital gains of individuals from business activity to 
 52.25  the extent excluded in computing federal taxable income. 
 52.26     Subd. 3.  [SUBTRACTIONS.] To the extent included in federal 
 52.27  taxable income, the following amounts are subtracted from income 
 52.28  to determine tax base: 
 52.29     (1) dividends received or deemed received, including the 
 52.30  foreign dividend gross-up; 
 52.31     (2) interest except amounts paid, credited, or reserved by 
 52.32  insurance companies as amounts necessary to fulfill the policy 
 52.33  and other contract liability requirements of sections 805 and 
 52.34  809 of the Internal Revenue Code; 
 52.35     (3) royalties; 
 52.36     (4) any capital loss not deducted in computing federal 
 53.1   taxable income. 
 53.2      Subd. 4.  [CAPITAL ACQUISITION DEDUCTION.] (a) The capital 
 53.3   acquisition deduction equals the amount paid or accrued for the 
 53.4   taxable year of the cost of tangible assets qualifying for 
 53.5   depreciation, amortization, or immediate or accelerated 
 53.6   deduction under the Internal Revenue Code.  Costs include 
 53.7   fabrication and installation costs.  The deduction is the full 
 53.8   amount paid or accrued, regardless of the amount allowed by 
 53.9   federal law for the taxable year. 
 53.10     (b) If the capital acquisition deduction exceeds the net 
 53.11  amount under subdivisions 1 to 3 for the taxable year, the rest 
 53.12  is a carryover capital acquisition deduction to the next three 
 53.13  taxable years.  The entire amount must be taken in the earliest 
 53.14  of the taxable years to which it may be carried. 
 53.15     Subd. 5.  [EXEMPTION.] The exemption amount is $500,000.  
 53.16  The exemption must be deducted after computation of tax base 
 53.17  under subdivisions 1 to 4, but before apportionment under 
 53.18  section 6 for multistate businesses. 
 53.19     Subd. 6.  [SPECIAL RULES FOR FINANCIAL INSTITUTIONS.] The 
 53.20  tax base of a financial institution is the amount calculated 
 53.21  under subdivisions 1 to 4, except that the addition under 
 53.22  subdivision 2, clause (2), item (iv), and the subtraction under 
 53.23  subdivision 3, clause (2), do not apply. 
 53.24     Sec. 6.  [290.9405] [MULTISTATE FIRMS.] 
 53.25     Subdivision 1.  [SCOPE.] The tax base of a firm from 
 53.26  business activity carried on partly within and partly without 
 53.27  Minnesota must be apportioned to Minnesota as provided in this 
 53.28  section. 
 53.29     Subd. 2.  [DEFINITIONS.] The definitions under section 
 53.30  290.191 apply for purposes of this section. 
 53.31     Subd. 3.  [APPORTIONMENT FORMULA.] (a) A firm must 
 53.32  apportion its tax base to Minnesota as follows.  The total tax 
 53.33  base, after deducting the capital acquisition deduction and 
 53.34  exemption, must be multiplied by the percentage that the firm's 
 53.35  sales made within Minnesota during the taxable year are of the 
 53.36  firm's total sales wherever made. 
 54.1      (b) A financial institution must apportion its tax base 
 54.2   under paragraph (a) using the receipts factor for financial 
 54.3   institutions. 
 54.4      Subd. 4.  [RULES FOR UNITARY BUSINESSES.] (a) If a business 
 54.5   activity conducted wholly within this state or partly within 
 54.6   this state is part of a unitary business, the entire tax base of 
 54.7   the unitary business is subject to apportionment under this 
 54.8   section.  The provisions of section 290.17 apply to determine if 
 54.9   a business activity is part of a unitary business. 
 54.10     (b) Each firm that is part of a unitary business must file 
 54.11  combined reports as the commissioner determines.  On the 
 54.12  reports, all intercompany transactions between domestic firms 
 54.13  that are part of the unitary business must be eliminated.  The 
 54.14  entire tax base of the unitary business must be apportioned 
 54.15  among the firms by using each firm's Minnesota sales factor in 
 54.16  the numerator of the apportionment formula and the total sales 
 54.17  factor of all firms in the unitary business in the denominator 
 54.18  of the apportionment formula. 
 54.19     (c) The tax base and apportionment factors of foreign firms 
 54.20  which are part of a unitary business are not included in the tax 
 54.21  base and apportionment factors of the unitary business.  A 
 54.22  foreign firm must file on a separate return basis. 
 54.23     Sec. 7.  [290.9406] [CREDITS.] 
 54.24     Subdivision 1.  [INSURANCE PREMIUMS TAX.] The amount of 
 54.25  premium tax paid by the firm under sections 60A.15 and 299F.21 
 54.26  to 299F.26 during the taxable year is a credit against the tax 
 54.27  under section 2. 
 54.28     Subd. 2.  [MINNESOTACARE TAX.] The amount of gross revenue 
 54.29  tax paid by the firm under sections 295.50 to 295.58 during the 
 54.30  taxable year is a credit against the tax under section 2. 
 54.31     Sec. 8.  [290.9407] [ADMINISTRATION.] 
 54.32     The commissioner of revenue shall prescribe forms and 
 54.33  instructions for payment of the tax.  The tax is due and payable 
 54.34  at the same times and under the same rules provided for the 
 54.35  franchise tax on corporations. 
 54.36     Sec. 9.  [REPEALER.] 
 55.1      Minnesota Statutes 1994, sections 290.0921; and 290.0922, 
 55.2   are repealed. 
 55.3      Sec. 10.  [EFFECTIVE DATE.] 
 55.4      Sections 1 to 9 are effective for taxable years beginning 
 55.5   after December 31, 1996. 
 55.6                              ARTICLE 8
 55.7                      CONTINGENT EFFECTIVE DATE
 55.8      Section 1.  [PROVISIONS CONTINGENT ON CONSTITUTIONAL 
 55.9   AMENDMENT.] 
 55.10     Articles 1 to 7 are effective only if the constitutional 
 55.11  amendment proposed to the people by article 1, section 1, is 
 55.12  adopted in the 1996 general election. 
 55.13                             ARTICLE 9
 55.14                     INCOME AND FRANCHISE TAXES 
 55.15     Section 1.  Minnesota Statutes 1994, section 10A.31, 
 55.16  subdivision 3a, is amended to read: 
 55.17     Subd. 3a.  [QUALIFICATION OF POLITICAL PARTIES.] A major 
 55.18  political party as defined in section 10A.01, subdivision 12, 
 55.19  qualifies for inclusion on the income tax form and property tax 
 55.20  refund return as provided in subdivision 3, provided that it 
 55.21  qualifies as a major political party by July 1 of the taxable 
 55.22  year. 
 55.23     A minor political party as defined in section 10A.01, 
 55.24  subdivision 13 qualifies for inclusion on the income tax form 
 55.25  and property tax refund return as provided in subdivision 3, 
 55.26  provided that 
 55.27     (1) (a) if a petition is filed, it is filed by June 1 of 
 55.28  the taxable year; or 
 55.29     (b) if the party ran a candidate for statewide office, that 
 55.30  office must have been the office of governor and lieutenant 
 55.31  governor, secretary of state, state auditor, state treasurer, or 
 55.32  attorney general; and 
 55.33     (2) the secretary of state certifies to the commissioner of 
 55.34  revenue by July 1, 1984, and by July 1 of every odd-numbered 
 55.35  year thereafter the parties which qualify as minor political 
 55.36  parties under this subdivision.  
 56.1      A minor party shall be certified only if the secretary of 
 56.2   state determines that the party satisfies the following 
 56.3   conditions:  
 56.4      (a) the party meets the requirements of section 10A.01, 
 56.5   subdivision 13, and in the last applicable election ran a 
 56.6   candidate for the statewide offices listed in clause (1)(b) of 
 56.7   this subdivision; 
 56.8      (b) it is a political party, not a principal campaign 
 56.9   committee; 
 56.10     (c) it has held a state convention in the last two years, 
 56.11  adopted a state constitution, and elected state officers; and 
 56.12     (d) an officer of the party has filed with the secretary of 
 56.13  state a certification that the party held a state convention in 
 56.14  the last two years, adopted a state constitution, and elected 
 56.15  state officers. 
 56.16     Sec. 2.  Minnesota Statutes 1994, section 165.08, 
 56.17  subdivision 5, is amended to read: 
 56.18     Subd. 5.  [EXEMPTIONS.] Notwithstanding any other provision 
 56.19  of law to the contrary, the properties, moneys, and other assets 
 56.20  of any joint and independent international authority or 
 56.21  commission created under subdivision 1, all revenues or other 
 56.22  income of any such authority or commission~~, and all bonds,~~ 
 56.23  ~~certificates of indebtedness, or other obligations issued by any~~ 
 56.24  ~~such authority or commission, and the interest thereon,~~ shall be 
 56.25  exempt from all taxation, licenses, fees, or charges of any kind 
 56.26  imposed by the state or by any county, municipality, political 
 56.27  subdivision, taxing district, or other public agency or body of 
 56.28  the state. 
 56.29     Sec. 3.  Minnesota Statutes 1994, section 270.067, 
 56.30  subdivision 2, is amended to read: 
 56.31     Subd. 2.  [PREPARATION; SUBMISSION.] The commissioner of 
 56.32  revenue shall prepare a tax expenditure budget for the state. 
 56.33  The tax expenditure budget report shall be submitted to the 
 56.34  legislature ~~as a supplement to the governor's budget and at the~~ 
 56.35  ~~same time as provided for submission of the budget pursuant to~~ 
 56.36  ~~section 16A.11, subdivision 1~~ by February 1 of each 
 57.1   even-numbered year. 
 57.2      Sec. 4.  Minnesota Statutes 1994, section 290.01, 
 57.3   subdivision 4a, is amended to read: 
 57.4      Subd. 4a.  [FINANCIAL INSTITUTION.] (a) "Financial 
 57.5   institution" means: 
 57.6      (1) a holding company; 
 57.7      (2) any regulated financial corporation; or 
 57.8      (3) any other corporation organized under the laws of the 
 57.9   United States or organized under the laws of this state or any 
 57.10  other state or country that is carrying on the business of a 
 57.11  financial institution. 
 57.12     (b) "Holding company" means any corporation registered 
 57.13  under the Federal Bank Holding Company Act of 1956, as amended, 
 57.14  or registered as a savings and loan holding company under the 
 57.15  Federal National Housing Act, as amended. 
 57.16     (c) "Regulated financial corporation" means an institution, 
 57.17  the deposits or accounts of which are insured under the Federal 
 57.18  Deposit Insurance Act or by the Federal Savings and Loan 
 57.19  Insurance Corporation, any institution which is a member of a 
 57.20  Federal Home Loan Bank, any other bank or thrift institution 
 57.21  incorporated or organized under the laws of any state or any 
 57.22  foreign country which is engaged in the business of receiving 
 57.23  deposits, any corporation organized under the provisions of 
 57.24  United States Code, title 12, sections 611 to 631 (Edge Act 
 57.25  Corporations), and any agency of a foreign depository as defined 
 57.26  in United States Code, title 12, section 3101. 
 57.27     (d) "Business of a financial institution" means: 
 57.28     (1) ~~the business that a regulated financial corporation may~~ 
 57.29  ~~be authorized to do under state or federal law or the business~~ 
 57.30  ~~that its subsidiary is authorized to do by the proper regulatory~~ 
 57.31  ~~authorities;~~ 
 57.32     ~~(2)~~ the business that any corporation organized under the 
 57.33  authority of the United States or organized under the laws of 
 57.34  this state or any other state or country does or has authority 
 57.35  to do which is substantially similar to the business which a 
 57.36  corporation may be created to do under chapters 46 to 55 or any 
 58.1   business which a corporation ~~or its subsidiary~~ is authorized to 
 58.2   do by those laws; or 
 58.3      ~~(3)~~ (2) the business that any corporation organized under 
 58.4   the authority of the United States or organized under the laws 
 58.5   of this state or any other state or country does or has 
 58.6   authority to do if the corporation derives more than 50 percent 
 58.7   of its gross income from lending activities (including 
 58.8   discounting obligations) in substantial competition with the 
 58.9   businesses described in ~~clauses~~ clause (1) ~~and (2)~~.  For 
 58.10  purposes of this clause, the computation of the gross income of 
 58.11  a corporation does not include income from nonrecurring, 
 58.12  extraordinary items. 
 58.13     Sec. 5.  Minnesota Statutes 1994, section 290.06, 
 58.14  subdivision 2c, is amended to read: 
 58.15     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 58.16  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 58.17  married individuals filing joint returns and surviving spouses 
 58.18  as defined in section 2(a) of the Internal Revenue Code must be 
 58.19  computed by applying to their taxable net income the following 
 58.20  schedule of rates: 
 58.21     (1) On the first $19,910, 6 percent; 
 58.22     (2) On all over $19,910, but not over $79,120, 8 percent; 
 58.23     (3) On all over $79,120, 8.5 percent. 
 58.24     Married individuals filing separate returns, estates, and 
 58.25  trusts must compute their income tax by applying the above rates 
 58.26  to their taxable income, except that the income brackets will be 
 58.27  one-half of the above amounts.  
 58.28     (b) The income taxes imposed by this chapter upon unmarried 
 58.29  individuals must be computed by applying to taxable net income 
 58.30  the following schedule of rates: 
 58.31     (1) On the first $13,620, 6 percent; 
 58.32     (2) On all over $13,620, but not over $44,750, 8 percent; 
 58.33     (3) On all over $44,750, 8.5 percent. 
 58.34     (c) The income taxes imposed by this chapter upon unmarried 
 58.35  individuals qualifying as a head of household as defined in 
 58.36  section 2(b) of the Internal Revenue Code must be computed by 
 59.1   applying to taxable net income the following schedule of rates: 
 59.2      (1) On the first $16,770, 6 percent; 
 59.3      (2) On all over $16,770, but not over $67,390, 8 percent; 
 59.4      (3) On all over $67,390, 8.5 percent. 
 59.5      (d) In lieu of a tax computed according to the rates set 
 59.6   forth in this subdivision, the tax of any individual taxpayer 
 59.7   whose taxable net income for the taxable year is less than an 
 59.8   amount determined by the commissioner must be computed in 
 59.9   accordance with tables prepared and issued by the commissioner 
 59.10  of revenue based on income brackets of not more than $100.  The 
 59.11  amount of tax for each bracket shall be computed at the rates 
 59.12  set forth in this subdivision, provided that the commissioner 
 59.13  may disregard a fractional part of a dollar unless it amounts to 
 59.14  50 cents or more, in which case it may be increased to $1. 
 59.15     (e) An individual who is not a Minnesota resident for the 
 59.16  entire year must compute the individual's Minnesota income tax 
 59.17  as provided in this subdivision.  After the application of the 
 59.18  nonrefundable credits provided in this chapter, the tax 
 59.19  liability must then be multiplied by a fraction in which:  
 59.20     (1) The numerator is the individual's Minnesota source 
 59.21  federal adjusted gross income as defined in section 62 of the 
 59.22  Internal Revenue Code increased by the addition required for 
 59.23  interest income from non-Minnesota state and municipal bonds 
 59.24  under section 290.01, subdivision 19a, clause (1), after 
 59.25  applying the allocation and assignability provisions of section 
 59.26  290.081, clause (a), or 290.17; and 
 59.27     (2) the denominator is the individual's federal adjusted 
 59.28  gross income as defined in section 62 of the Internal Revenue 
 59.29  Code of 1986, as amended through April 15, 1995, increased by 
 59.30  the addition required for interest income from non-Minnesota 
 59.31  state and municipal bonds under section 290.01, subdivision 19a, 
 59.32  clause (1). 
 59.33     Sec. 6.  Minnesota Statutes 1994, section 290.06, 
 59.34  subdivision 22, is amended to read: 
 59.35     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
 59.36  taxpayer who is liable for taxes on or measured by net income to 
 60.1   another state or province or territory of Canada, as provided in 
 60.2   paragraphs (b) through (f), upon income allocated or apportioned 
 60.3   to Minnesota, is entitled to a credit for the tax paid to 
 60.4   another state or province or territory of Canada if the tax is 
 60.5   actually paid in the taxable year or a subsequent taxable year.  
 60.6   A taxpayer who is a resident of this state pursuant to section 
 60.7   290.01, subdivision 7, clause (2), and who is subject to income 
 60.8   tax as a resident in the state of the individual's domicile is 
 60.9   not allowed this credit unless the state of domicile does not 
 60.10  allow a similar credit. 
 60.11     (b) For an individual, estate, or trust, the credit is 
 60.12  determined by multiplying the tax payable under this chapter by 
 60.13  the ratio derived by dividing the income subject to tax in the 
 60.14  other state or province or territory of Canada that is also 
 60.15  subject to tax in Minnesota while a resident of Minnesota by the 
 60.16  taxpayer's federal adjusted gross income, as defined in section 
 60.17  62 of the Internal Revenue Code, modified by the addition 
 60.18  required by section 290.01, subdivision 19a, clause (1), and the 
 60.19  subtraction allowed by section 290.01, subdivision 19b, clause 
 60.20  (1), to the extent the income is allocated or assigned to 
 60.21  Minnesota under sections 290.081 and 290.17.  
 60.22     (c) If the taxpayer is an athletic team that apportions all 
 60.23  of its income under section 290.17, subdivision 5, paragraph 
 60.24  (c), the credit is determined by multiplying the tax payable 
 60.25  under this chapter by the ratio derived from dividing the total 
 60.26  net income subject to tax in the other state or province or 
 60.27  territory of Canada by the taxpayer's Minnesota taxable income. 
 60.28     (d) The credit determined under paragraph (b) or (c) shall 
 60.29  not exceed the amount of tax so paid to the other state or 
 60.30  province or territory of Canada on the gross income earned 
 60.31  within the other state or province or territory of Canada 
 60.32  subject to tax under this chapter, nor shall the allowance of 
 60.33  the credit reduce the taxes paid under this chapter to an amount 
 60.34  less than what would be assessed if such income amount was 
 60.35  excluded from taxable net income. 
 60.36     (e) In the case of the tax assessed on a lump sum 
 61.1   distribution under section 290.032, the credit allowed under 
 61.2   paragraph (a) is the tax assessed by the other state or province 
 61.3   or territory of Canada on the lump sum distribution that is also 
 61.4   subject to tax under section 290.032, and shall not exceed the 
 61.5   tax assessed under section 290.032.  To the extent the total 
 61.6   lump sum distribution defined in section 290.032, subdivision 1, 
 61.7   includes lump sum distributions received in prior years or is 
 61.8   all or in part an annuity contract, the reduction to the tax on 
 61.9   the lump sum distribution allowed under section 290.032, 
 61.10  subdivision 2, includes tax paid to another state that is 
 61.11  properly apportioned to that distribution. 
 61.12     (f) If a Minnesota resident reported an item of income to 
 61.13  Minnesota and is assessed tax in such other state or province or 
 61.14  territory of Canada on that same income after the Minnesota 
 61.15  statute of limitations has expired, the taxpayer shall receive a 
 61.16  credit for that year under paragraph (a), notwithstanding any 
 61.17  statute of limitations to the contrary.  The claim for the 
 61.18  credit must be submitted within one year from the date the taxes 
 61.19  were paid to the other state or province or territory of 
 61.20  Canada.  The taxpayer must submit sufficient proof to show 
 61.21  entitlement to a credit. 
 61.22     (g) For the purposes of this subdivision, a resident 
 61.23  shareholder of a corporation having a valid election in effect 
 61.24  under section 1362 of the Internal Revenue Code must be 
 61.25  considered to have paid a tax imposed on the shareholder in an 
 61.26  amount equal to the shareholder's pro rata share of any net 
 61.27  income tax paid by the S corporation to ~~a~~ another state ~~that~~ 
 61.28  ~~does not measure the income of the shareholder of the S~~ 
 61.29  ~~corporation by reference to the income of the S corporation~~.  
 61.30  For the purposes of the preceding sentence, the term "net income 
 61.31  tax" means any tax imposed on or measured by a corporation's net 
 61.32  income. 
 61.33     (h) For the purposes of this subdivision, a resident member 
 61.34  of a limited liability company taxed as a partnership under the 
 61.35  Internal Revenue Code must be considered to have paid a tax 
 61.36  imposed on the member in an amount equal to the member's pro 
 62.1   rata share of any net income tax paid by the limited liability 
 62.2   company to a state that does not measure the income of the 
 62.3   member of the limited liability company by reference to the 
 62.4   income of the limited liability company.  For purposes of the 
 62.5   preceding sentence, the term "net income" tax means any tax 
 62.6   imposed on or measured by a limited liability company's net 
 62.7   income. 
 62.8      Sec. 7.  Minnesota Statutes 1994, section 290.06, is 
 62.9   amended by adding a subdivision to read: 
 62.10     Subd. 25.  [CREDIT FOR CONTRIBUTIONS TO HIGHER 
 62.11  EDUCATION.] (a) Subject to the limitations provided by this 
 62.12  subdivision, individuals may take as a credit against the tax 
 62.13  due under this chapter an amount equal to 30 percent of the 
 62.14  aggregate amount of charitable contributions made during the 
 62.15  taxable year to a nonprofit institution of higher education 
 62.16  located within this state or a nonprofit corporation, fund, 
 62.17  foundation, trust, or association organized and operated 
 62.18  exclusively for the benefit of institutions of higher education 
 62.19  located within this state.  For individuals who elect to itemize 
 62.20  deductions under section 63(e) of the Internal Revenue Code, the 
 62.21  percentage used to calculate the credit is reduced to 21.5 
 62.22  percent.  
 62.23     (b) The maximum amount allowable as a credit under this 
 62.24  subdivision for individuals in any taxable year is $50 for an 
 62.25  individual and $100 for a married couple filing jointly.  
 62.26     (c) If the amount of the credit determined under this 
 62.27  subdivision for any taxable year exceeds the limitations imposed 
 62.28  in this subdivision, the unused portion of the credit cannot be 
 62.29  carried to another taxable year.  
 62.30     (d) For the purpose of this subdivision, "institution of 
 62.31  higher education" means a nonprofit educational institution 
 62.32  located within this state which meets all of the following 
 62.33  requirements:  
 62.34     (1) it maintains a regular faculty and curriculum and has a 
 62.35  regularly enrolled body of students in attendance at the place 
 62.36  where its educational activities are carried on; 
 63.1      (2) it regularly offers education above the 12th grade; 
 63.2      (3) it provides programs of study that meet the needs of 
 63.3   students for occupational, general, baccalaureate, and graduate 
 63.4   education; and 
 63.5      (4) it is recognized by the board of trustees of the 
 63.6   Minnesota state colleges and universities as an institution of 
 63.7   higher education.  
 63.8      (e) For the purpose of this subdivision, "institution 
 63.9   organized and operated exclusively for the benefit of 
 63.10  institutions of higher education" means nonprofit corporations, 
 63.11  funds, foundations, trusts, or associations organized and 
 63.12  operated exclusively for the benefit of institutions of higher 
 63.13  education located within this state which are controlled or 
 63.14  approved and reviewed by the governing board of the institution 
 63.15  benefiting from the charitable contribution. 
 63.16     (f) For the purpose of this subdivision, "charitable 
 63.17  contributions" has the meaning given in section 170 of the 
 63.18  Internal Revenue Code, and is limited to contributions made by 
 63.19  individuals. 
 63.20     Sec. 8.  [290.0672] [JOB TRAINING CREDIT.] 
 63.21     Subdivision 1.  [CREDIT ALLOWED.] (a) A credit is allowed 
 63.22  against the tax imposed by section 290.06, subdivision 1, equal 
 63.23  to the sum of: 
 63.24     (1) placement fees paid to a job training program upon 
 63.25  hiring a qualified graduate of the program; and 
 63.26     (2) retention fees paid to a job training program for 
 63.27  retention of a qualified graduate of the program. 
 63.28     (b) The maximum placement fee qualifying for a credit under 
 63.29  this section is $12,000 per qualified graduate in the year 
 63.30  hired.  The maximum retention fee qualifying for a credit under 
 63.31  this section is $6,000 per qualified graduate retained as an 
 63.32  employee per year.  Only retention fees paid in the second year 
 63.33  and third year after the qualified graduate is hired qualify for 
 63.34  the credit. 
 63.35     (c) A credit is allowed only up to the dollar amount of 
 63.36  certificates, issued under subdivision 4, and provided by the 
 64.1   job training program to the taxpayer. 
 64.2      Subd. 2.  [QUALIFIED JOB TRAINING PROGRAM.] (a) To qualify 
 64.3   for credits under this section, a job training program must 
 64.4   satisfy the following requirements: 
 64.5      (1) It must be operated by a nonprofit corporation that 
 64.6   qualifies under section 501(c)(3) of the Internal Revenue Code. 
 64.7      (2) The organization must spend an average of $5,000 per 
 64.8   participant in the program. 
 64.9      (3) The program must provide education and training in: 
 64.10     (i) basic skills, such as reading, writing, mathematics, 
 64.11  and communications; 
 64.12     (ii) thinking skills, such as reasoning, creative thinking, 
 64.13  decision making, and problem solving; and 
 64.14     (iii) personal qualities, such as responsibility, 
 64.15  self-esteem, self-management, honesty, and integrity. 
 64.16     (4) The program must provide income supplements, when 
 64.17  needed, to participants for housing, counseling, tuition, and 
 64.18  other basic needs. 
 64.19     (5) The education and training course must last for at 
 64.20  least six months. 
 64.21     (6) Individuals served by the program must: 
 64.22     (i) be over 18 years old; 
 64.23     (ii) have had income of no more than $10,000 per year in 
 64.24  the last two years; 
 64.25     (iii) have assets of no more than $5,000; and 
 64.26     (iv) not have been claimed as a dependent on the federal 
 64.27  tax return of another person in the previous taxable year. 
 64.28     (b) The program must be certified by the commissioner of 
 64.29  revenue as meeting the requirements of this subdivision. 
 64.30     Subd. 3.  [QUALIFIED GRADUATE.] A qualified graduate is a 
 64.31  graduate of a job training program qualifying under subdivision 
 64.32  1, who is placed in a job paying at least $9 per hour or its 
 64.33  equivalent. 
 64.34     Subd. 4.  [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total 
 64.35  amount of credits under this section is limited to $1,500,000 
 64.36  for taxable years beginning after December 31, 1995, and before 
 65.1   January 1, 2002.  No more than $250,000 in credits may be 
 65.2   allowed for the taxable years beginning during a calendar year. 
 65.3      (b) Upon application, the commissioner shall issue 
 65.4   certificates to job training programs, certified under 
 65.5   subdivision 2, up to the dollar amount available for the taxable 
 65.6   year.  The certificates must be in a dollar amount that is no 
 65.7   greater than the dollar amount applied for, and reflects the 
 65.8   commissioner's estimate of the job training program's projected 
 65.9   fees for placements and retentions of qualifying graduates.  The 
 65.10  commissioner shall issue the certificates in the order in which 
 65.11  applications are received until the available authority has been 
 65.12  issued. 
 65.13     (c) To the extent available, the job training program must 
 65.14  provide to employers of its qualified graduates certificates 
 65.15  issued by the commissioner under this subdivision. 
 65.16     Subd. 5.  [NONREFUNDABLE; CARRYOVER.] (a) The credit for 
 65.17  the taxable year may not exceed the liability for tax under 
 65.18  section 290.06, subdivision 1, for the taxable year, reduced by 
 65.19  the sum of nonrefundable credits allowed under this chapter. 
 65.20     (b) If the credit for a taxable year exceeds the limitation 
 65.21  under paragraph (a), the excess is a carryover to each of the 
 65.22  five succeeding taxable years.  All of the carryover must be 
 65.23  carried to the earliest of the taxable years to which it may be 
 65.24  carried and then to each later year.  The carryover may not 
 65.25  exceed the taxpayer's tax under section 290.06, subdivision 1, 
 65.26  for the taxable year after deducting the credit for the taxable 
 65.27  year. 
 65.28     Subd. 6.  [EXPIRATION.] This section expires effective for 
 65.29  taxable years beginning after December 31, 2001. 
 65.30     Sec. 9.  [290.0681] [CREDIT FOR CONTRIBUTIONS TO 
 65.31  NEIGHBORHOOD ASSISTANCE PROGRAMS.] 
 65.32     Subdivision 1.  [CREDIT ALLOWED.] A taxpayer is allowed a 
 65.33  credit against the tax imposed by this chapter in an amount 
 65.34  equal to 50 percent of the amount contributed by the taxpayer 
 65.35  during the taxable year to a neighborhood organization for a 
 65.36  neighborhood assistance program that qualifies under this 
 66.1   section. 
 66.2      Subd. 2.  [DEFINITIONS.] (a) "Community services" means 
 66.3   counseling and advice, emergency assistance, medical care, 
 66.4   recreational facilities, housing facilities, employment 
 66.5   placement, job training, or economic development assistance 
 66.6   provided to persons and families of low or moderate income as 
 66.7   defined in section 469.002, subdivisions 17 and 18, residing in 
 66.8   an economically disadvantaged area or to groups comprised of or 
 66.9   acting on behalf of such persons and families. 
 66.10     (b) "Economically disadvantaged area" means an enterprise 
 66.11  zone, or any other area in the state that is certified as an 
 66.12  economically disadvantaged area by the department of trade and 
 66.13  economic development after consultation with the department of 
 66.14  human services.  The certification must be made on the basis of 
 66.15  current indices of social and economic conditions, which shall 
 66.16  include but not be limited to the median per capita income of 
 66.17  the area in relation to the median per capita income of the 
 66.18  state or standard metropolitan statistical area in which the 
 66.19  area is located. 
 66.20     (c) "Employment placement" means providing services 
 66.21  relating to the recruitment, screening, counseling, supporting, 
 66.22  and retention in employment of individuals who reside in 
 66.23  economically disadvantaged areas, including the provision of 
 66.24  transportation to job sites. 
 66.25     (d) "Job training" means instruction to an individual who 
 66.26  resides in an economically disadvantaged area that enables the 
 66.27  individual to acquire vocational skills in order to become 
 66.28  employable or be able to seek a higher grade of employment. 
 66.29     (e) "Neighborhood assistance" means: 
 66.30     (1) furnishing financial assistance, labor, material, and 
 66.31  technical advice by means of community services that aid in the 
 66.32  physical or economic improvement of any part or all of an 
 66.33  economically disadvantaged area; or 
 66.34     (2) furnishing technical advice to promote higher 
 66.35  employment in any neighborhood in the state. 
 66.36     (f) "Neighborhood organization" means any organization that:
 67.1      (1) performs community services in an economically 
 67.2   disadvantaged area; and 
 67.3      (2) is exempt from taxation under section 501(c)(3) of the 
 67.4   Internal Revenue Code. 
 67.5      Subd. 3.  [PROGRAM QUALIFICATION.] The commissioner of 
 67.6   trade and economic development shall adopt rules defining the 
 67.7   qualification of neighborhood organizations consistent with the 
 67.8   definition in subdivision 2.  A neighborhood organization that 
 67.9   intends to qualify its programs for the tax credit must apply to 
 67.10  the department of trade and economic development for a 
 67.11  certificate to operate a neighborhood assistance program.  The 
 67.12  commissioner of trade and economic development shall notify the 
 67.13  commissioner of revenue regarding the identity of each 
 67.14  neighborhood organization that has been certified to accept 
 67.15  contributions that are eligible for the tax credit for the 
 67.16  current calendar year, by September 1 of each year. 
 67.17     Subd. 4.  [LIMITATIONS; CARRYOVER.] (a) The credit under 
 67.18  this section shall not exceed $250,000 for any taxable year. 
 67.19     (b) The credit for the taxable year shall not exceed the 
 67.20  tax imposed on the taxpayer for the taxable year, reduced by the 
 67.21  sum of the nonrefundable credits allowed under this chapter. 
 67.22     (c) If the amount of the credit determined under this 
 67.23  section for any taxable year exceeds the limitation under 
 67.24  paragraph (b), the excess shall be a credit carryover to each of 
 67.25  the five succeeding taxable years.  The entire amount of the 
 67.26  excess unused credit for the taxable year shall be carried first 
 67.27  to the earliest of the taxable years to which the credit may be 
 67.28  carried and then to each successive year to which the credit may 
 67.29  be carried.  The amount of the unused credit which may be added 
 67.30  under this paragraph shall not exceed the taxpayer's liability 
 67.31  for tax less any additional credit under this section for the 
 67.32  current taxable year. 
 67.33     Sec. 10.  Minnesota Statutes 1994, section 290.091, 
 67.34  subdivision 2, is amended to read: 
 67.35     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 67.36  this section, the following terms have the meanings given: 
 68.1      (a) "Alternative minimum taxable income" means the sum of 
 68.2   the following for the taxable year: 
 68.3      (1) the taxpayer's federal alternative minimum taxable 
 68.4   income as defined in section 55(b)(2) of the Internal Revenue 
 68.5   Code; 
 68.6      (2) the taxpayer's itemized deductions allowed in computing 
 68.7   federal alternative minimum taxable income, but excluding the 
 68.8   Minnesota charitable contribution deduction and the medical 
 68.9   expense deduction; 
 68.10     (3) for depletion allowances computed under section 613A(c) 
 68.11  of the Internal Revenue Code, with respect to each property (as 
 68.12  defined in section 614 of the Internal Revenue Code), to the 
 68.13  extent not included in federal alternative minimum taxable 
 68.14  income, the excess of the deduction for depletion allowable 
 68.15  under section 611 of the Internal Revenue Code for the taxable 
 68.16  year over the adjusted basis of the property at the end of the 
 68.17  taxable year (determined without regard to the depletion 
 68.18  deduction for the taxable year); 
 68.19     (4) to the extent not included in federal alternative 
 68.20  minimum taxable income, the amount of the tax preference for 
 68.21  intangible drilling cost under section 57(a)(2) of the Internal 
 68.22  Revenue Code determined without regard to subparagraph (E); 
 68.23     (5) to the extent not included in federal alternative 
 68.24  minimum taxable income, the amount of interest income as 
 68.25  provided by section 290.01, subdivision 19a, clause (1); 
 68.26     less the sum of the amounts determined under the following 
 68.27  clauses (1) to (3): 
 68.28     (1) interest income as defined in section 290.01, 
 68.29  subdivision 19b, clause (1); 
 68.30     (2) an overpayment of state income tax as provided by 
 68.31  section 290.01, subdivision 19b, clause (2), to the extent 
 68.32  included in federal alternative minimum taxable income; and 
 68.33     (3) the amount of investment interest paid or accrued 
 68.34  within the taxable year on indebtedness to the extent that the 
 68.35  amount does not exceed net investment income, as defined in 
 68.36  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 69.1   not include amounts deducted in computing federal adjusted gross 
 69.2   income. 
 69.3      In the case of an estate or trust, alternative minimum 
 69.4   taxable income must be computed as provided in section 59(c) of 
 69.5   the Internal Revenue Code. 
 69.6      (b) "Investment interest" means investment interest as 
 69.7   defined in section 163(d)(3) of the Internal Revenue Code. 
 69.8      (c) "Tentative minimum tax" equals seven percent of 
 69.9   alternative minimum taxable income after subtracting the 
 69.10  exemption amount determined under subdivision 3. 
 69.11     (d) "Regular tax" means the tax that would be imposed under 
 69.12  this chapter (without regard to this section and section 
 69.13  290.032), reduced by the sum of the nonrefundable credits 
 69.14  allowed under this chapter.  
 69.15     (e) "Net minimum tax" means the minimum tax imposed by this 
 69.16  section. 
 69.17     (f) "Minnesota charitable contribution deduction" means a 
 69.18  charitable contribution deduction under section 170 of the 
 69.19  Internal Revenue Code to or for the use of an entity described 
 69.20  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 69.21  federal deduction for charitable contributions is limited under 
 69.22  section 170(b) of the Internal Revenue Code, the allowable 
 69.23  contributions in the year of contribution are deemed to be first 
 69.24  contributions to entities described in section 290.21, 
 69.25  subdivision 3, clauses (a) to (e). 
 69.26     Sec. 11.  Minnesota Statutes 1994, section 290.0922, 
 69.27  subdivision 1, is amended to read: 
 69.28     Subdivision 1.  [IMPOSITION.] (a) In addition to the tax 
 69.29  imposed by this chapter without regard to this section, the 
 69.30  franchise tax imposed on a corporation required to file under 
 69.31  section 289A.08, subdivision 3, other than a corporation having 
 69.32  a valid election in effect under section 1362 of the Internal 
 69.33  Revenue Code for the taxable year includes a tax equal to the 
 69.34  following amounts: 
 69.35       If the sum of the corporation's
 69.36  Minnesota property, payrolls, and sales
 70.1   or receipts is:                            the tax equals:
 70.2              less than $500,000                    $0
 70.3      $   500,000 to $   999,999                  $100
 70.4      $ 1,000,000 to $ 4,999,999                  $300
 70.5      $ 5,000,000 to $ 9,999,999                $1,000 
 70.6      $10,000,000 to $19,999,999                $2,000 
 70.7      $20,000,000 or more                       $5,000 
 70.8      (b) A tax is imposed ~~annually beginning in 1990~~ for each 
 70.9   taxable year on a corporation required to file a return under 
 70.10  section 289A.12, subdivision 3, that has a valid election in 
 70.11  effect for the taxable year under section 1362 of the Internal 
 70.12  Revenue Code and on a partnership required to file a return 
 70.13  under section 289A.12, subdivision 3, other than a partnership 
 70.14  that derives over 80 percent of its income from farming.  The 
 70.15  tax imposed under this paragraph is due on or before the due 
 70.16  date of the return for the taxpayer due under section 289A.18, 
 70.17  subdivision 1.  The commissioner shall prescribe the return to 
 70.18  be used for payment of this tax. The tax under this paragraph is 
 70.19  equal to the following amounts:  
 70.20       If the sum of the S corporation's or partnership's 
 70.21  Minnesota property, payrolls, and sales
 70.22  or receipts is:                        the tax equals:
 70.23               less than $500,000                $0 
 70.24       $   500,000 to $   999,999              $100 
 70.25       $ 1,000,000 to $ 4,999,999              $300 
 70.26       $ 5,000,000 to $ 9,999,999            $1,000 
 70.27       $10,000,000 to $19,999,999            $2,000 
 70.28       $20,000,000 or more                   $5,000 
 70.29     Sec. 12.  Minnesota Statutes 1994, section 290.17, 
 70.30  subdivision 2, is amended to read: 
 70.31     Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
 70.32  BUSINESS.] The income of a taxpayer subject to the allocation 
 70.33  rules that is not derived from the conduct of a trade or 
 70.34  business must be assigned in accordance with paragraphs (a) to 
 70.35  (f):  
 70.36     (a)(1) Subject to paragraphs (a)(2) and (a)(3), income from 
 71.1   labor or personal or professional services is assigned to this 
 71.2   state if, and to the extent that, the labor or services are 
 71.3   performed within it; all other income from such sources is 
 71.4   treated as income from sources without this state.  
 71.5      Severance pay shall be considered income from labor or 
 71.6   personal or professional services. 
 71.7      (2) In the case of an individual who is a nonresident of 
 71.8   Minnesota and who is an athlete or entertainer, income from 
 71.9   compensation for labor or personal services performed within 
 71.10  this state shall be determined in the following manner:  
 71.11     (i) The amount of income to be assigned to Minnesota for an 
 71.12  individual who is a nonresident salaried athletic team employee 
 71.13  shall be determined by using a fraction in which the denominator 
 71.14  contains the total number of days in which the individual is 
 71.15  under a duty to perform for the employer, and the numerator is 
 71.16  the total number of those days spent in Minnesota; and 
 71.17     (ii) The amount of income to be assigned to Minnesota for 
 71.18  an individual who is a nonresident, and who is an athlete or 
 71.19  entertainer not listed in clause (i), for that person's athletic 
 71.20  or entertainment performance in Minnesota shall be determined by 
 71.21  assigning to this state all income from performances or athletic 
 71.22  contests in this state.  
 71.23     (3) For purposes of this section, amounts received by a 
 71.24  nonresident from the United States, its agencies or 
 71.25  instrumentalities, the Federal Reserve Bank, the state of 
 71.26  Minnesota or any of its political or governmental subdivisions, 
 71.27  or a Minnesota volunteer firefighters' relief association, by 
 71.28  way of payment as a pension, public employee retirement benefit, 
 71.29  or any combination of these, or as a retirement or survivor's 
 71.30  benefit made from a plan qualifying under section 401, 403, 408, 
 71.31  or 409, or as defined in section 403(b) or 457 of the Internal 
 71.32  Revenue Code, are not considered income derived from carrying on 
 71.33  a trade or business or from performing personal or professional 
 71.34  services in Minnesota, and are not taxable under this chapter.  
 71.35     (b) Income or gains from tangible property located in this 
 71.36  state that is not employed in the business of the recipient of 
 72.1   the income or gains must be assigned to this state. 
 72.2      (c) Income or gains from intangible personal property not 
 72.3   employed in the business of the recipient of the income or gains 
 72.4   must be assigned to this state if the recipient of the income or 
 72.5   gains is a resident of this state or is a resident trust or 
 72.6   estate.  
 72.7      Gain on the sale of a partnership interest is allocable to 
 72.8   this state in the ratio of the original cost of partnership 
 72.9   tangible property in this state to the original cost of 
 72.10  partnership tangible property everywhere, determined at the time 
 72.11  of the sale.  If more than 50 percent of the value of the 
 72.12  partnership's assets consists of intangibles, gain or loss from 
 72.13  the sale of the partnership interest is allocated to this state 
 72.14  in accordance with the sales factor of the partnership for its 
 72.15  first full tax period immediately preceding the tax period of 
 72.16  the partnership during which the partnership interest was sold. 
 72.17     Gain on the sale of goodwill or income from a covenant not 
 72.18  to compete that is connected with a business operating all or 
 72.19  partially in Minnesota is allocated to this state to the extent 
 72.20  that the income from the business in the year preceding the year 
 72.21  of sale was assignable to Minnesota under subdivision 3.  
 72.22     When an employer pays an employee for a covenant not to 
 72.23  compete, the income allocated to this state is in the ratio of 
 72.24  the employee's service in Minnesota in the calendar year 
 72.25  preceding leaving the employment of the employer over the total 
 72.26  services performed by the employee for the employer in that year.
 72.27     (d) Income from the operation of a farm shall be assigned 
 72.28  to this state if the farm is located within this state and to 
 72.29  other states only if the farm is not located in this state.  
 72.30     (e) Income from winnings on Minnesota pari-mutuel betting 
 72.31  tickets, the Minnesota state lottery, and lawful gambling as 
 72.32  defined in section 349.12, subdivision 24, conducted within the 
 72.33  boundaries of the state of Minnesota shall be assigned to this 
 72.34  state.  
 72.35     (f) All items of gross income not covered in paragraphs (a) 
 72.36  to (e) and not part of the taxpayer's income from a trade or 
 73.1   business shall be assigned to the taxpayer's domicile. 
 73.2      Sec. 13.  Minnesota Statutes 1995 Supplement, section 
 73.3   290.191, subdivision 5, is amended to read: 
 73.4      Subd. 5.  [DETERMINATION OF SALES FACTOR.] For purposes of 
 73.5   this section, the following rules apply in determining the sales 
 73.6   factor.  
 73.7      (a) The sales factor includes all sales, gross earnings, or 
 73.8   receipts received in the ordinary course of the business, except 
 73.9   that the following types of income are not included in the sales 
 73.10  factor: 
 73.11     (1) interest; 
 73.12     (2) dividends; 
 73.13     (3) sales of capital assets as defined in section 1221 of 
 73.14  the Internal Revenue Code; 
 73.15     (4) sales of property used in the trade or business, except 
 73.16  sales of leased property of a type which is regularly sold as 
 73.17  well as leased; 
 73.18     (5) sales of debt instruments as defined in section 
 73.19  1275(a)(1) of the Internal Revenue Code or sales of stock; and 
 73.20     (6) royalties, fees, or other like income of a type which 
 73.21  qualify for a subtraction from federal taxable income under 
 73.22  section 290.01, subdivision 19(d)(11).  
 73.23     (b) Sales of tangible personal property are made within 
 73.24  this state if the property is received by a purchaser at a point 
 73.25  within this state, and the taxpayer is taxable in this state, 
 73.26  regardless of the f.o.b. point, other conditions of the sale, or 
 73.27  the ultimate destination of the property. 
 73.28     (c) Tangible personal property delivered to a common or 
 73.29  contract carrier or foreign vessel for delivery to a purchaser 
 73.30  in another state or nation is a sale in that state or nation, 
 73.31  regardless of f.o.b. point or other conditions of the sale.  
 73.32     (d) Notwithstanding paragraphs (b) and (c), when 
 73.33  intoxicating liquor, wine, fermented malt beverages, cigarettes, 
 73.34  or tobacco products are sold to a purchaser who is licensed by a 
 73.35  state or political subdivision to resell this property only 
 73.36  within the state of ultimate destination, the sale is made in 
 74.1   that state.  
 74.2      (e) Sales made by or through a corporation that is 
 74.3   qualified as a domestic international sales corporation under 
 74.4   section 992 of the Internal Revenue Code are not considered to 
 74.5   have been made within this state.  
 74.6      (f) Sales, rents, royalties, and other income in connection 
 74.7   with real property is attributed to the state in which the 
 74.8   property is located.  
 74.9      (g) Receipts from the lease or rental of tangible personal 
 74.10  property, including finance leases and true leases, must be 
 74.11  attributed to this state if the property is located in this 
 74.12  state and to other states if the property is not located in this 
 74.13  state.  Receipts from the lease or rental of moving property 
 74.14  including, but not limited to, motor vehicles, rolling stock, 
 74.15  aircraft, vessels, or mobile equipment ~~is located in this state~~ 
 74.16  ~~if~~ are included in the numerator of the receipts factor to the 
 74.17  extent that the property is used in this state.  The extent of 
 74.18  the use of moving property is determined as follows: 
 74.19     (1) ~~the operation of the property is entirely within this~~ 
 74.20  ~~state; or~~ A motor vehicle is used wholly in the state in which 
 74.21  it is registered.  
 74.22     (2) ~~the operation of the property is in two or more states~~ 
 74.23  ~~and the principal base of operations from which the property is~~ 
 74.24  ~~sent out is in this state.~~  The extent that rolling stock is 
 74.25  used in this state is determined by multiplying the receipts 
 74.26  from the lease or rental of the rolling stock by a fraction, the 
 74.27  numerator of which is the miles traveled within this state by 
 74.28  the leased or rented rolling stock and the denominator of which 
 74.29  is the total miles traveled by the leased or rented rolling 
 74.30  stock. 
 74.31     (3) The extent that an aircraft is used in this state is 
 74.32  determined by multiplying the receipts from the lease or rental 
 74.33  of the aircraft by a fraction, the numerator of which is the 
 74.34  number of landings of the aircraft in this state and the 
 74.35  denominator of which is the total number of landings of the 
 74.36  aircraft. 
 75.1      (4) The extent that a vessel, mobile equipment, or other 
 75.2   mobile property is used in the state is determined by 
 75.3   multiplying the receipts from the lease or rental of the 
 75.4   property by a fraction, the numerator of which is the number of 
 75.5   days during the taxable year the property was in this state and 
 75.6   the denominator of which is the total days in the taxable year.  
 75.7      (h) Royalties and other income not described in paragraph 
 75.8   (a), clause (6), received for the use of or for the privilege of 
 75.9   using intangible property, including patents, know-how, 
 75.10  formulas, designs, processes, patterns, copyrights, trade names, 
 75.11  service names, franchises, licenses, contracts, customer lists, 
 75.12  or similar items, must be attributed to the state in which the 
 75.13  property is used by the purchaser.  If the property is used in 
 75.14  more than one state, the royalties or other income must be 
 75.15  apportioned to this state pro rata according to the portion of 
 75.16  use in this state.  If the portion of use in this state cannot 
 75.17  be determined, the royalties or other income must be excluded 
 75.18  from both the numerator and the denominator.  Intangible 
 75.19  property is used in this state if the purchaser uses the 
 75.20  intangible property or the rights therein in the regular course 
 75.21  of its business operations in this state, regardless of the 
 75.22  location of the purchaser's customers. 
 75.23     (i) Sales of intangible property are made within the state 
 75.24  in which the property is used by the purchaser.  If the property 
 75.25  is used in more than one state, the sales must be apportioned to 
 75.26  this state pro rata according to the portion of use in this 
 75.27  state.  If the portion of use in this state cannot be 
 75.28  determined, the sale must be excluded from both the numerator 
 75.29  and the denominator of the sales factor.  Intangible property is 
 75.30  used in this state if the purchaser used the intangible property 
 75.31  in the regular course of its business operations in this state. 
 75.32     (j) Receipts from the performance of services must be 
 75.33  attributed to the state where the services are received.  For 
 75.34  the purposes of this section, receipts from the performance of 
 75.35  services provided to a corporation, partnership, or trust may 
 75.36  only be attributed to a state where it has a fixed place of 
 76.1   doing business.  If the state where the services are received is 
 76.2   not readily determinable or is a state where the corporation, 
 76.3   partnership, or trust receiving the service does not have a 
 76.4   fixed place of doing business, the services shall be deemed to 
 76.5   be received at the location of the office of the customer from 
 76.6   which the services were ordered in the regular course of the 
 76.7   customer's trade or business.  If the ordering office cannot be 
 76.8   determined, the services shall be deemed to be received at the 
 76.9   office of the customer to which the services are billed.  
 76.10     Sec. 14.  Minnesota Statutes 1995 Supplement, section 
 76.11  290.191, subdivision 6, is amended to read: 
 76.12     Subd. 6.  [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL 
 76.13  INSTITUTIONS.] (a) For purposes of this section, the rules in 
 76.14  this subdivision and subdivision 8 apply in determining the 
 76.15  receipts factor for financial institutions.  
 76.16     (b) "Receipts" for this purpose means gross income, 
 76.17  including net taxable gain on disposition of assets, including 
 76.18  securities and money market instruments, when derived from 
 76.19  transactions and activities in the regular course of the 
 76.20  taxpayer's trade or business.  
 76.21     (c) "Money market instruments" means federal funds sold and 
 76.22  securities purchased under agreements to resell, commercial 
 76.23  paper, banker's acceptances, and purchased certificates of 
 76.24  deposit and similar instruments to the extent that the 
 76.25  instruments are reflected as assets under generally accepted 
 76.26  accounting principles.  
 76.27     (d) "Securities" means United States Treasury securities, 
 76.28  obligations of United States government agencies and 
 76.29  corporations, obligations of state and political subdivisions, 
 76.30  corporate stock, bonds, and other securities, participations in 
 76.31  securities backed by mortgages held by United States or state 
 76.32  government agencies, loan-backed securities and similar 
 76.33  investments to the extent the investments are reflected as 
 76.34  assets under generally accepted accounting principles.  
 76.35     (e) Receipts from the lease or rental of real or tangible 
 76.36  personal property, including both finance leases and true 
 77.1   leases, must be attributed to this state if the property is 
 77.2   located in this state.  Receipts from the lease or rental of 
 77.3   tangible personal property that is characteristically moving 
 77.4   property, ~~such as~~ including, but not limited to, motor vehicles, 
 77.5   rolling stock, aircraft, vessels, or mobile equipment~~, and the~~ 
 77.6   ~~like, is considered to be located in a state if~~ are included in 
 77.7   the numerator of the receipts factor to the extent that the 
 77.8   property is used in this state.  The extent of the use of moving 
 77.9   property is determined as follows: 
 77.10     (1) ~~the operation of the property is entirely within the~~ 
 77.11  ~~state; or~~ A motor vehicle is used wholly in the state in which 
 77.12  it is registered. 
 77.13     (2) ~~the operation of the property is in two or more states,~~ 
 77.14  ~~but the principal base of operations from which the property is~~ 
 77.15  ~~sent out is in the state.~~  The extent that rolling stock is used 
 77.16  in this state is determined by multiplying the receipts from the 
 77.17  lease or rental of the rolling stock by a fraction, the 
 77.18  numerator of which is the miles traveled within this state by 
 77.19  the leased or rented rolling stock and the denominator of which 
 77.20  is the total miles traveled by the leased or rented rolling 
 77.21  stock. 
 77.22     (3) The extent that an aircraft is used in this state is 
 77.23  determined by multiplying the receipts from the lease or rental 
 77.24  of the aircraft by a fraction, the numerator of which is the 
 77.25  number of landings of the aircraft in this state and the 
 77.26  denominator of which is the total number of landings of the 
 77.27  aircraft. 
 77.28     (4) The extent that a vessel, mobile equipment, or other 
 77.29  mobile property is used in the state is determined by 
 77.30  multiplying the receipts from the lease or rental of property by 
 77.31  a fraction, the numerator of which is the number of days during 
 77.32  the taxable year the property was in this state and the 
 77.33  denominator of which is the total days in the taxable year. 
 77.34     (f) Interest income and other receipts from assets in the 
 77.35  nature of loans that are secured primarily by real estate or 
 77.36  tangible personal property must be attributed to this state if 
 78.1   the security property is located in this state under the 
 78.2   principles stated in paragraph (e).  
 78.3      (g) Interest income and other receipts from consumer loans 
 78.4   not secured by real or tangible personal property that are made 
 78.5   to residents of this state, whether at a place of business, by 
 78.6   traveling loan officer, by mail, by telephone or other 
 78.7   electronic means, must be attributed to this state.  
 78.8      (h) Interest income and other receipts from commercial 
 78.9   loans and installment obligations that are unsecured by real or 
 78.10  tangible personal property or secured by intangible property 
 78.11  must be attributed to this state if the proceeds of the loan are 
 78.12  to be applied in this state.  If it cannot be determined where 
 78.13  the funds are to be applied, the income and receipts are 
 78.14  attributed to the state in which the office of the borrower from 
 78.15  which the application would be made in the regular course of 
 78.16  business is located.  If this cannot be determined, the 
 78.17  transaction is disregarded in the apportionment formula. 
 78.18     (i) Interest income and other receipts from a participating 
 78.19  financial institution's portion of participation and syndication 
 78.20  loans must be attributed under paragraphs (e) to (h).  A 
 78.21  participation loan is an arrangement in which a lender makes a 
 78.22  loan to a borrower and then sells, assigns, or otherwise 
 78.23  transfers all or a part of the loan to a purchasing financial 
 78.24  institution.  A syndication loan is a loan transaction involving 
 78.25  multiple financial institutions in which all the lenders are 
 78.26  named as parties to the loan documentation, are known to the 
 78.27  borrower, and have privity of contract with the borrower.  
 78.28     (j) Interest income and other receipts including service 
 78.29  charges from financial institution credit card and travel and 
 78.30  entertainment credit card receivables and credit card holders' 
 78.31  fees must be attributed to the state to which the card charges 
 78.32  and fees are regularly billed.  
 78.33     (k) Merchant discount income derived from financial 
 78.34  institution credit card holder transactions with a merchant must 
 78.35  be attributed to the state in which the merchant is located.  In 
 78.36  the case of merchants located within and outside the state, only 
 79.1   receipts from merchant discounts attributable to sales made from 
 79.2   locations within the state are attributed to this state.  It is 
 79.3   presumed, subject to rebuttal, that the location of a merchant 
 79.4   is the address shown on the invoice submitted by the merchant to 
 79.5   the taxpayer. 
 79.6      (l) Receipts from the performance of fiduciary and other 
 79.7   services must be attributed to the state in which the services 
 79.8   are received.  For the purposes of this section, services 
 79.9   provided to a corporation, partnership, or trust must be 
 79.10  attributed to a state where it has a fixed place of doing 
 79.11  business.  If the state where the services are received is not 
 79.12  readily determinable or is a state where the corporation, 
 79.13  partnership, or trust does not have a fixed place of doing 
 79.14  business, the services shall be deemed to be received at the 
 79.15  location of the office of the customer from which the services 
 79.16  were ordered in the regular course of the customer's trade or 
 79.17  business.  If the ordering office cannot be determined, the 
 79.18  services shall be deemed to be received at the office of the 
 79.19  customer to which the services are billed.  
 79.20     (m) Receipts from the issuance of travelers checks and 
 79.21  money orders must be attributed to the state in which the checks 
 79.22  and money orders are purchased.  
 79.23     (n) Receipts from investments of a financial institution in 
 79.24  securities and from money market instruments must be apportioned 
 79.25  to this state based on the ratio that total deposits from this 
 79.26  state, its residents, including any business with an office or 
 79.27  other place of business in this state, its political 
 79.28  subdivisions, agencies, and instrumentalities bear to the total 
 79.29  deposits from all states, their residents, their political 
 79.30  subdivisions, agencies, and instrumentalities.  In the case of 
 79.31  an unregulated financial institution subject to this section, 
 79.32  these receipts are apportioned to this state based on the ratio 
 79.33  that its gross business income, excluding such receipts, earned 
 79.34  from sources within this state bears to gross business income, 
 79.35  excluding such receipts, earned from sources within all states.  
 79.36  For purposes of this subdivision, deposits made by this state, 
 80.1   its residents, its political subdivisions, agencies, and 
 80.2   instrumentalities must be attributed to this state, whether or 
 80.3   not the deposits are accepted or maintained by the taxpayer at 
 80.4   locations within this state. 
 80.5      (o) A financial institution's interest in property 
 80.6   described in section 290.015, subdivision 3, paragraph (b), is 
 80.7   included in the receipts factor in the same manner as assets in 
 80.8   the nature of securities or money market instruments are 
 80.9   included in paragraph (n). 
 80.10     Sec. 15.  Minnesota Statutes 1994, section 458A.32, 
 80.11  subdivision 4, is amended to read: 
 80.12     Subd. 4.  Revenue bonds of the authority shall be deemed 
 80.13  and treated as instrumentalities of a public government agency~~;~~ 
 80.14  ~~and as such, together with interest thereon, exempt from~~ 
 80.15  ~~taxation~~. 
 80.16     Sec. 16.  [EFFECTIVE DATE.] 
 80.17     Sections 1 and 4 to 12 are effective for taxable years 
 80.18  beginning after December 31, 1995. 
 80.19     Sections 2 and 15 are effective for income earned after 
 80.20  July 1, 1983, in taxable years beginning after December 31, 1982.
 80.21     Sections 13 and 14 are effective for tax years beginning 
 80.22  after June 30, 1997. 
 80.23                             ARTICLE 10
 80.24                      SALES AND SPECIAL TAXES
 80.25     Section 1.  Minnesota Statutes 1995 Supplement, section 
 80.26  115B.48, is amended by adding a subdivision to read: 
 80.27     Subd. 7.  [FACILITY.] "Facility" means one or more 
 80.28  buildings or parts of a building and the equipment, 
 80.29  installations, and structures contained in the building, located 
 80.30  on a single site or on contiguous or adjacent sites.  Facility 
 80.31  includes any site or area where a hazardous substance, or a 
 80.32  pollutant or contaminant, has been deposited, stored, disposed 
 80.33  of, or placed, or otherwise comes to be located. 
 80.34     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 80.35  115B.48, is amended by adding a subdivision to read: 
 80.36     Subd. 8.  [FULL-TIME EQUIVALENCE.] "Full-time equivalence" 
 81.1   means 2,000 hours worked by employees, owners, and others, at 
 81.2   duties related to the drycleaning operation in a drycleaning 
 81.3   facility during a 12-month period beginning July 1 of the 
 81.4   preceding year and running through June 30 of the year in which 
 81.5   the annual registration fee is due.  For those drycleaning 
 81.6   facilities that were in business less than the 12-month period, 
 81.7   full-time equivalence means the total of all of the hours worked 
 81.8   at duties related to the drycleaning operation in the 
 81.9   drycleaning facility, divided by 2,000 and multiplied by a 
 81.10  fraction, the numerator of which is 50 and the denominator of 
 81.11  which is the number of weeks in business during the reporting 
 81.12  period. 
 81.13     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
 81.14  115B.49, subdivision 2, is amended to read: 
 81.15     Subd. 2.  [REVENUE SOURCES.] Revenue from the following 
 81.16  sources must be deposited in the state treasury and credited to 
 81.17  the account: 
 81.18     (1) the proceeds of the fees imposed by subdivision 4; 
 81.19     (2) interest attributable to investment of money in the 
 81.20  account; 
 81.21     (3) penalties and interest collected under subdivision 4, 
 81.22  ~~paragraphs (e) and (f)~~ paragraph (d); and 
 81.23     (4) money received by the commissioner for deposit in the 
 81.24  account in the form of gifts, grants, and appropriations. 
 81.25     Sec. 4.  Minnesota Statutes 1995 Supplement, section 
 81.26  115B.49, subdivision 4, is amended to read: 
 81.27     Subd. 4.  [REGISTRATION; FEES.] (a) The owner or operator 
 81.28  of a drycleaning facility shall register on or before July 1 of 
 81.29  each year with the commissioner of revenue in a manner 
 81.30  prescribed by the commissioner of revenue and pay a registration 
 81.31  fee for the facility.  The amount of the fee is: 
 81.32     (1) $500, for facilities with ~~up to four full-time~~ 
 81.33  ~~equivalent employees~~ a full-time equivalence of fewer than five; 
 81.34     (2) $1,000, for facilities with a full-time equivalence of 
 81.35  five to ten ~~full-time equivalent employees~~; and 
 81.36     (3) $1,500, for facilities with a full-time equivalence of 
 82.1   more than ten ~~full-time equivalent employees~~. 
 82.2      (b) A person who sells drycleaning solvents for use by 
 82.3   drycleaning facilities in the state shall collect and remit to 
 82.4   the commissioner of revenue in a manner prescribed by the 
 82.5   commissioner of revenue, on or before the 20th day of the month 
 82.6   following the month in which the sales of drycleaning solvents 
 82.7   are made, a fee of: 
 82.8      (1) $3.50 for each gallon of perchloroethylene sold for use 
 82.9   by drycleaning facilities in the state; and 
 82.10     (2) 70 cents for each gallon of hydrocarbon-based 
 82.11  drycleaning solvent sold for use by drycleaning facilities in 
 82.12  the state. 
 82.13     (c) ~~The commissioner of revenue shall provide each person~~ 
 82.14  ~~who pays a registration fee under paragraph (a) with a receipt.~~  
 82.15  ~~The receipt or a copy of the receipt must be produced for~~ 
 82.16  ~~inspection at the request of any authorized representative of~~ 
 82.17  ~~the commissioner of revenue.~~ 
 82.18     ~~(d)~~ The commissioner shall, after a public hearing but 
 82.19  notwithstanding section 16A.1285, subdivision 4, annually adjust 
 82.20  the fees in this subdivision as necessary to maintain an 
 82.21  unencumbered balance in the account of at least $1,000,000.  Any 
 82.22  adjustment under this paragraph must be prorated among all the 
 82.23  fees in this subdivision.  Fees adjusted under this paragraph 
 82.24  may not exceed 200 percent of the fees in this subdivision.  The 
 82.25  commissioner shall notify the commissioner of revenue of an 
 82.26  adjustment under this paragraph no later than March 1 of the 
 82.27  year in which the adjustment is to become effective.  The 
 82.28  adjustment is effective for sales of drycleaning solvents made, 
 82.29  and annual registration fees due, beginning on July 1 of the 
 82.30  same year. 
 82.31     ~~(e) An owner of a drycleaning facility who fails to pay a~~ 
 82.32  ~~fee under paragraph (a) when due is subject to a penalty of $50~~ 
 82.33  ~~per facility for each day the fee is not paid.~~ 
 82.34     ~~(f)~~ (d) To enforce this subdivision, the commissioner of 
 82.35  revenue may examine documents, assess and collect fees, conduct 
 82.36  investigations, issue subpoenas, grant extensions to file 
 83.1   returns and pay fees, impose ~~sales and use tax~~ penalties and 
 83.2   interest on the annual registration fee under paragraph (a) and 
 83.3   the monthly fee under paragraph (b), abate penalties and 
 83.4   interest, and administer appeals, in the manner provided in 
 83.5   chapters 270 and 289A.  The penalties and interest imposed on 
 83.6   taxes under chapter 297A apply to the fees imposed under this 
 83.7   subdivision.  Disclosure of data collected by the commissioner 
 83.8   of revenue under this subdivision is governed by chapter 270B. 
 83.9      Sec. 5.  [115B.491] [DRYCLEANING FACILITY USE FEE; 
 83.10  FACILITIES TO FILE RETURN.] 
 83.11     Subdivision 1.  [USE FEE.] A drycleaning facility that 
 83.12  purchases drycleaning solvents for use in Minnesota without 
 83.13  paying the seller of drycleaning solvents the fee under section 
 83.14  115B.49, subdivision 4, paragraph (b), is subject to an 
 83.15  equivalent fee.  Liability for the fee is incurred when 
 83.16  drycleaning solvents are received in Minnesota by the 
 83.17  drycleaning facility. 
 83.18     Subd. 2.  [RETURN REQUIRED.] On or before the 20th of each 
 83.19  calendar month, every drycleaning facility that has purchased 
 83.20  drycleaning solvents for use in this state during the preceding 
 83.21  calendar month, upon which the fee imposed by section 115B.49, 
 83.22  subdivision 4, paragraph (b), has not been paid to the seller of 
 83.23  the drycleaning solvents, shall file a return with the 
 83.24  commissioner of revenue showing the quantity of solvents 
 83.25  purchased and a computation of the fee under section 115B.49, 
 83.26  subdivision 4, paragraph (d).  The fee must accompany the 
 83.27  return.  The return must be made upon a form furnished and 
 83.28  prescribed by the commissioner of revenue and must contain such 
 83.29  other information as the commissioner of revenue may require. 
 83.30     Subd. 3.  [APPLICABILITY.] All of the provisions of section 
 83.31  115B.49, subdivision 4, paragraph (d), apply to this section. 
 83.32     Sec. 6.  [115B.492] [ALLOCATION OF PAYMENT.] 
 83.33     In the discretion of the commissioner of revenue, payments 
 83.34  received for fees may be credited first to the oldest liability 
 83.35  not secured by a judgment or lien.  For liabilities to which 
 83.36  payments are applied, the commissioner of revenue may credit 
 84.1   payments first to penalties, next to interest, and then to the 
 84.2   fee due. 
 84.3      Sec. 7.  Minnesota Statutes 1995 Supplement, section 
 84.4   289A.40, subdivision 1, is amended to read: 
 84.5      Subdivision 1.  [TIME LIMIT; GENERALLY.] Unless otherwise 
 84.6   provided in this chapter, a claim for a refund of an overpayment 
 84.7   of state tax must be filed within 3-1/2 years from the date 
 84.8   prescribed for filing the return, plus any extension of time 
 84.9   granted for filing the return, but only if filed within the 
 84.10  extended time, or one year from the date of an order assessing 
 84.11  tax under section 289A.37, subdivision 1, upon payment in full 
 84.12  of the tax, penalties, and interest shown on the order, 
 84.13  whichever period expires later.  
 84.14     Claims for refund, except for taxes under chapter 297A, 
 84.15  filed after the 3-1/2 year period but within the one-year period 
 84.16  are limited to the amount of the tax, penalties, and interest on 
 84.17  the order and to issues determined by the order. 
 84.18     In the case of assessments under section 289A.38, 
 84.19  subdivision 5 or 6, claims for refund under chapter 297A filed 
 84.20  after the 3-1/2 year period but within the one-year period are 
 84.21  limited to the amount of the tax, penalties, and interest on the 
 84.22  order that are due for the period before the 3-1/2 year period.  
 84.23     Sec. 8.  Minnesota Statutes 1994, section 289A.50, is 
 84.24  amended by adding a subdivision to read: 
 84.25     Subd. 2a.  [REFUND OF SALES TAX TO PURCHASERS.] If a vendor 
 84.26  has collected from a purchaser a tax on a transaction that is 
 84.27  not subject to the tax imposed by chapter 297A, the purchaser 
 84.28  may apply directly to the commissioner for a refund under this 
 84.29  section if: 
 84.30     (a) the purchaser is currently registered to collect and 
 84.31  remit the sales and use tax; and 
 84.32     (b) the amount of the refund applied for exceeds $500. 
 84.33     The purchaser may not file more than two applications for 
 84.34  refund under this subdivision in a calendar year. 
 84.35     Sec. 9.  Minnesota Statutes 1994, section 289A.56, 
 84.36  subdivision 4, is amended to read: 
 85.1      Subd. 4.  [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO 
 85.2   PURCHASERS.] Notwithstanding subdivision 3, for refunds payable 
 85.3   under ~~section~~ sections 297A.15, subdivision 5, and 289A.50, 
 85.4   subdivision 2a, interest is computed from the date the refund 
 85.5   claim is filed with the commissioner. 
 85.6      Sec. 10.  Minnesota Statutes 1994, section 297.04, 
 85.7   subdivision 9, is amended to read: 
 85.8      Subd. 9.  [APPLICATION DENIAL; LICENSE SUSPENSION AND 
 85.9   REVOCATION.] (a) The commissioner may revoke~~, cancel,~~ or suspend 
 85.10  the license or licenses of any distributor or subjobber for 
 85.11  violation of sections 297.01 to 297.13, or any other act 
 85.12  applicable to the sale of cigarettes, or any rule promulgated by 
 85.13  the commissioner, and may also revoke any such license or 
 85.14  licenses of any distributor or subjobber for the violation of 
 85.15  sections 297.31 to 297.39, or any other act applicable to the 
 85.16  sale of tobacco products, or any rule promulgated by the 
 85.17  commissioner in furtherance of sections 297.31 to 297.39.  The 
 85.18  commissioner may revoke~~, cancel,~~ or suspend the license or 
 85.19  licenses of any distributor or subjobber for violation of 
 85.20  sections 325D.31 to 325D.42.  
 85.21     (b) The department must not issue or renew a license under 
 85.22  this chapter, and may revoke a license under this chapter, if 
 85.23  the applicant or licensee: 
 85.24     (1) owes $500 or more in delinquent taxes as defined in 
 85.25  section 270.72; 
 85.26     (2) after demand, has not filed tax returns required by the 
 85.27  commissioner of revenue; 
 85.28     (3) had a cigarette or tobacco license revoked by the 
 85.29  commissioner of revenue within the past two years; 
 85.30     (4) had a sales and use tax permit revoked by the 
 85.31  commissioner of revenue within the past two years; or 
 85.32     (5) has been convicted of a crime involving cigarettes, 
 85.33  including but not limited to:  selling stolen cigarettes or 
 85.34  tobacco items, receiving stolen cigarettes or tobacco items, or 
 85.35  involvement in the smuggling of cigarettes or tobacco items. 
 85.36     (c) No license shall be revoked~~, canceled,~~ or suspended 
 86.1   under this chapter, and no application for a license shall be 
 86.2   denied under this chapter, except after 20 days' notice ~~and~~ 
 86.3   specifying the commissioner's allegations against the licensee 
 86.4   or applicant, and the right to request, in writing within 20 
 86.5   days, a contested case hearing ~~by the commissioner~~ as provided 
 86.6   in ~~section 297.09~~ chapter 14.  If a written request for a 
 86.7   hearing is received by the department of revenue within 20 days 
 86.8   of the date of the initial notice, the hearing must be held 
 86.9   within 45 days after referral to the office of administrative 
 86.10  hearings, and no earlier than 20 days after notice to the 
 86.11  licensee or applicant of the hearing time and place.  A license 
 86.12  is revoked or suspended, and an application is denied, when the 
 86.13  commissioner serves notice of revocation, suspension, or denial 
 86.14  after 20 days have passed following the initial notice under 
 86.15  this paragraph without a request for hearing being made, or if a 
 86.16  hearing is held, after the commissioner serves an order of 
 86.17  revocation, suspension, or denial under section 14.62, 
 86.18  subdivision 1.  All notices under this paragraph may be served 
 86.19  personally or by mail.  
 86.20     Sec. 11.  Minnesota Statutes 1995 Supplement, section 
 86.21  297A.02, subdivision 4, is amended to read: 
 86.22     Subd. 4.  [MANUFACTURED HOUSING AND PARK TRAILERS.] 
 86.23  Notwithstanding the provisions of subdivision 1, for sales at 
 86.24  retail of ~~new~~ manufactured homes used for residential purposes 
 86.25  and new or used park trailers, as defined in section 168.011, 
 86.26  subdivision 8, paragraph (b), the excise tax is imposed upon 65 
 86.27  percent of the sales price of the home or park trailer. 
 86.28     Sec. 12.  [297A.023] [REMITTANCE OF AMOUNTS COLLECTED AS 
 86.29  TAXES.] 
 86.30     Any amounts collected, even if erroneously or illegally 
 86.31  collected, from a purchaser under a representation that they are 
 86.32  taxes imposed under chapter 297A are state funds from the time 
 86.33  of collection and must be reported on a return filed with the 
 86.34  commissioner and are not subject to refund without proof that 
 86.35  such amounts have been refunded or credited to the purchaser by 
 86.36  the seller. 
 87.1      Sec. 13.  Minnesota Statutes 1994, section 297A.09, is 
 87.2   amended to read: 
 87.3      297A.09 [PRESUMPTION OF TAX; BURDEN OF PROOF.] 
 87.4      For the purpose of the proper administration of sections 
 87.5   297A.01 to 297A.44 and to prevent evasion of the tax, it shall 
 87.6   be presumed that all gross receipts are subject to the tax until 
 87.7   the contrary is established.  The burden of proving that a sale 
 87.8   is not a sale at retail is upon the person who makes the sale, 
 87.9   but that person may take from the purchaser, at the time the 
 87.10  exempt purchase occurs, an exemption certificate to the effect 
 87.11  that the property purchased is for resale or that the sale is 
 87.12  otherwise exempt from the application of the tax imposed by 
 87.13  sections 297A.01 to 297A.44.  Any person asserting a claim that 
 87.14  certain sales are exempt, who does not have the required 
 87.15  exemption certificates in their possession, shall acquire the 
 87.16  certificates within 60 days after receiving written notice from 
 87.17  the commissioner that the certificates are required.  If the 
 87.18  certificates are not obtained within the 60-day period, the 
 87.19  sales are deemed to be taxable sales under this chapter. 
 87.20     Sec. 14.  Minnesota Statutes 1994, section 297A.14, is 
 87.21  amended by adding a subdivision to read: 
 87.22     Subd. 4.  [DE MINIMIS EXEMPTION.] Purchases subject to use 
 87.23  tax under this section are exempt if (1) the purchase is made by 
 87.24  an individual for personal use, and (2) the total purchases that 
 87.25  are subject to the use tax do not exceed $770 in the calendar 
 87.26  year.  For purposes of this subdivision, "personal use" includes 
 87.27  purchases for gifts.  If an individual makes purchases of more 
 87.28  than $770 in the calendar year that are subject to use tax, the 
 87.29  individual must pay the use tax on the entire amount. 
 87.30     Sec. 15.  Minnesota Statutes 1994, section 297A.15, 
 87.31  subdivision 4, is amended to read: 
 87.32     Subd. 4.  [SEIZURE; COURT REVIEW.] The commissioner of 
 87.33  revenue or the commissioner's duly authorized agents are 
 87.34  empowered to seize and confiscate in the name of the state any 
 87.35  truck, automobile or means of transportation not owned or 
 87.36  operated by a common carrier, used in the illegal importation 
 88.1   and transportation of any article or articles of tangible 
 88.2   personal property by a retailer or the retailer's agent or 
 88.3   employee who does not have a sales or use tax permit and has 
 88.4   been engaging in transporting personal property into the state 
 88.5   without payment of the tax.  The commissioner may demand the 
 88.6   forfeiture and sale of the truck, automobile or other means of 
 88.7   transportation together with the property being transported 
 88.8   illegally, unless the owner establishes to the satisfaction of 
 88.9   the commissioner or the court that the owner had no notice or 
 88.10  knowledge or reason to believe that the vehicle was used or 
 88.11  intended to be used in any such violation.  Within two days 
 88.12  after the seizure, the person making the seizure shall deliver 
 88.13  an inventory of the vehicle and property seized to the person 
 88.14  from whom the seizure was made, if known, and to any person 
 88.15  known or believed to have any right, title, interest or lien on 
 88.16  the vehicle or property, and shall also file a copy with the 
 88.17  commissioner.  Within ten days after the date of service of the 
 88.18  inventory, the person from whom the vehicle and property was 
 88.19  seized or any person claiming an interest in the vehicle or 
 88.20  property may file with the commissioner a demand for a judicial 
 88.21  determination of the question as to whether the vehicle or 
 88.22  property was lawfully subject to seizure and forfeiture.  The 
 88.23  commissioner, within 30 days, shall institute an action in the 
 88.24  district court of the county where the seizure was made to 
 88.25  determine the issue of forfeiture.  The action shall be brought 
 88.26  in the name of the state and shall be prosecuted by the county 
 88.27  attorney or by the attorney general.  The court shall hear the 
 88.28  action without a jury and shall try and determine the issues of 
 88.29  fact and law involved.  Whenever a judgment of forfeiture is 
 88.30  entered, the commissioner may, unless the judgment is stayed 
 88.31  pending an appeal, cause the forfeited vehicle and property to 
 88.32  be sold at public auction as provided by law.  If a demand for 
 88.33  judicial determination is made and no action is commenced as 
 88.34  provided in this subdivision, the vehicle and property shall be 
 88.35  released by the commissioner and redelivered to the person 
 88.36  entitled to it.  If no demand is made, the vehicle and property 
 89.1   seized shall be deemed forfeited to the state by operation of 
 89.2   law and may be disposed of by the commissioner as provided where 
 89.3   there has been a judgment of forfeiture.  The forfeiture and 
 89.4   sale of the automobile, truck or other means of transportation, 
 89.5   and of the property being transported illegally in it, is a 
 89.6   penalty for the violation of this chapter.  After deducting the 
 89.7   expense of keeping the vehicle and property, the fee for 
 89.8   seizure, and the costs of the sale, the commissioner shall pay 
 89.9   from the funds collected all liens according to their priority, 
 89.10  which are established at the hearing as being bona fide and as 
 89.11  existing without the lienor having any notice or knowledge that 
 89.12  the vehicle or property was being used or was intended to be 
 89.13  used for or in connection with any such violation as specified 
 89.14  in the order of the court, and shall pay the balance of the 
 89.15  proceeds into the state treasury to be credited to the general 
 89.16  fund.  The state shall not be liable for any liens in excess of 
 89.17  the proceeds from the sale after deductions provided.  Any sale 
 89.18  under the provisions of this section shall operate to free the 
 89.19  vehicle and property sold from any and all liens on it, and 
 89.20  appeal from the order of the district court will lie as in other 
 89.21  civil cases.  
 89.22     For the purposes of this section, "common carrier" means 
 89.23  any person engaged in transportation for hire of tangible 
 89.24  personal property by motor vehicle, limited to (1) a person 
 89.25  possessing a certificate or permit ~~authorizing~~ or having 
 89.26  completed a registration process that authorizes for-hire 
 89.27  transportation of property from the ~~interstate commerce~~ 
 89.28  ~~commission or the public utilities commission~~ United States 
 89.29  Department of Transportation, the transportation regulation 
 89.30  board, or the department of transportation; or (2) any person 
 89.31  transporting commodities defined as "exempt" in for-hire 
 89.32  transportation; or (3) any person who pursuant to a contract 
 89.33  with a person described in (1) or (2) above transports tangible 
 89.34  personal property.  
 89.35     Sec. 16.  Minnesota Statutes 1994, section 297A.211, 
 89.36  subdivision 1, is amended to read: 
 90.1      Subdivision 1. Every person, as defined in this chapter, 
 90.2   who is engaged in interstate for-hire transportation of tangible 
 90.3   personal property or passengers by motor vehicle may at their 
 90.4   option, under rules prescribed by the commissioner, register as 
 90.5   retailers and pay the taxes imposed by this chapter in 
 90.6   accordance with this section.  Persons referred to herein are:  
 90.7   (1) persons possessing a certificate or permit ~~authorizing~~ or 
 90.8   having completed a registration process that authorizes for-hire 
 90.9   transportation of property or passengers from the ~~interstate~~ 
 90.10  ~~commerce commission or the Minnesota public utilities commission~~ 
 90.11  United States Department of Transportation, the transportation 
 90.12  regulation board, or the department of transportation; or (2) 
 90.13  persons transporting commodities defined as "exempt" in for-hire 
 90.14  transportation in interstate commerce; or (3) persons who, 
 90.15  pursuant to contracts with persons described in clauses (1) or 
 90.16  (2) above, transport tangible personal property in interstate 
 90.17  commerce.  Persons qualifying under clauses (2) and (3) must 
 90.18  maintain on a current basis the same type of mileage records 
 90.19  that are required by persons specified in clause (1) by 
 90.20  the ~~interstate commerce commission~~ United States Department of 
 90.21  Transportation.  Persons who in the course of their business are 
 90.22  transporting solely their own goods in interstate commerce may 
 90.23  also register as retailers pursuant to rules prescribed by the 
 90.24  commissioner and pay the taxes imposed by this chapter in 
 90.25  accordance with this section.  
 90.26     Sec. 17.  Minnesota Statutes 1994, section 297A.25, 
 90.27  subdivision 14, is amended to read: 
 90.28     Subd. 14.  [AIRFLIGHT EQUIPMENT.] The gross receipts from 
 90.29  sales of airflight equipment to, and the storage, use or other 
 90.30  consumption of such property by airline companies ~~taxed under~~ 
 90.31  ~~the provisions of sections 270.071 to 270.079~~, as defined in 
 90.32  section 270.071, subdivision 4, are exempt.  For purposes of 
 90.33  this subdivision, "airflight equipment" includes airplanes and 
 90.34  parts necessary for the repair and maintenance of such airflight 
 90.35  equipment, and flight simulators, but does not include airplanes 
 90.36  with a gross weight of less than 30,000 pounds that are used on 
 91.1   intermittent or irregularly timed flights. 
 91.2      Sec. 18.  Minnesota Statutes 1994, section 297A.25, 
 91.3   subdivision 28, is amended to read: 
 91.4      Subd. 28.  [WASTE PROCESSING EQUIPMENT.] The gross receipts 
 91.5   from the sale of equipment used for processing solid or 
 91.6   hazardous waste, including pollution control equipment used at a 
 91.7   facility owned and operated by a unit of government, at a 
 91.8   resource recovery facility, as defined in section 115A.03, 
 91.9   subdivision 28, are exempt. 
 91.10     Sec. 19.  Minnesota Statutes 1995 Supplement, section 
 91.11  297A.25, subdivision 57, is amended to read: 
 91.12     Subd. 57.  [HORSES; RELATED MATERIALS.] (a) The gross 
 91.13  receipts from the sale of horses, including racehorses~~, and~~ 
 91.14  ~~all~~ are exempt. 
 91.15     (b) Sales ~~to persons who raise or board horses,~~ of all 
 91.16  materials, including feed and bedding, used or consumed in the 
 91.17  breeding, raising, owning, boarding, and keeping of horses, are 
 91.18  exempt.  Machinery, equipment, implements, tools, appliances, 
 91.19  furniture, and fixtures, used in the breeding, raising, and 
 91.20  keeping of horses, are not included within this exemption. 
 91.21     Sec. 20.  Minnesota Statutes 1995 Supplement, section 
 91.22  297A.25, subdivision 59, is amended to read: 
 91.23     Subd. 59.  [FARM MACHINERY.] ~~From July 1, 1994, until June~~ 
 91.24  ~~30, 1996,~~ The gross receipts from the sale of used farm 
 91.25  machinery are exempt. 
 91.26     Sec. 21.  Minnesota Statutes 1995 Supplement, section 
 91.27  297A.25, subdivision 61, is amended to read: 
 91.28     Subd. 61.  [CONSTRUCTION MATERIALS FOR INDOOR ICE ARENAS.] 
 91.29  The gross receipts from the sale of construction materials and 
 91.30  supplies are exempt if:  
 91.31     (1) the materials and supplies are to be used in 
 91.32  constructing an indoor ice arena intended to be used 
 91.33  predominantly for youth athletic activities; and 
 91.34     (2) ~~a school district is a party to a joint powers~~ 
 91.35  ~~agreement that governs the ownership, operation, and maintenance~~ 
 91.36  ~~of the facility~~ the construction project is financed in whole or 
 92.1   in part from a grant under sections 240A.09 and 240A.10 or the 
 92.2   proceeds of obligations issued under section 373.43 or 475.58, 
 92.3   subdivision 3.  
 92.4      This exemption applies regardless of whether the purchases 
 92.5   are made by the owner of the facility or a contractor. 
 92.6      Sec. 22.  Minnesota Statutes 1994, section 297A.25, is 
 92.7   amended by adding a subdivision to read: 
 92.8      Subd. 62.  [CONSTRUCTION MATERIALS FOR METAL SHREDDING 
 92.9   FACILITIES.] Construction materials and supplies are exempt from 
 92.10  the tax imposed under this chapter, regardless of whether 
 92.11  purchased by the owner or a contractor, subcontractor, or 
 92.12  builder, if the materials and supplies are used or consumed in 
 92.13  constructing a metal materials shredding facility with a 
 92.14  processing capacity in excess of 20,000 tons per month, and the 
 92.15  facility is located at least one mile distant from any home rule 
 92.16  charter or statutory city. 
 92.17     Sec. 23.  Minnesota Statutes 1994, section 297A.25, is 
 92.18  amended by adding a subdivision to read: 
 92.19     Subd. 63.  [CONSTRUCTION MATERIALS FOR STEAM PRODUCING 
 92.20  FACILITIES.] Construction materials and supplies are exempt from 
 92.21  the tax imposed under this chapter, regardless of whether 
 92.22  purchased by the owner or a contractor, subcontractor, or 
 92.23  builder, if the materials and supplies are used or consumed in 
 92.24  constructing a steam producing facility with a steam producing 
 92.25  capacity in excess of one billion pounds of steam per year, for 
 92.26  the primary purpose of space heating, and the facility is 
 92.27  located outside of the portion of the Mississippi river critical 
 92.28  area designated in section 116G.15, that is located within the 
 92.29  cities of Minneapolis and St. Paul. 
 92.30     Sec. 24.  Minnesota Statutes 1994, section 297A.256, 
 92.31  subdivision 1, is amended to read: 
 92.32     Subdivision 1.  [FUNDRAISING SALES BY NONPROFIT GROUPS.] 
 92.33  Notwithstanding the provisions of this chapter, the following 
 92.34  sales made by a "nonprofit organization" are exempt from the 
 92.35  sales and use tax. 
 92.36     (a)(1) All sales made by an organization for fundraising 
 93.1   purposes if that organization exists solely for the purpose of 
 93.2   providing educational or social activities for young people 
 93.3   primarily age 18 and under.  This exemption shall apply only if 
 93.4   the gross annual sales receipts of the organization from 
 93.5   fundraising do not exceed $10,000. 
 93.6      (2) A club, association, or other organization of 
 93.7   elementary or secondary school students organized for the 
 93.8   purpose of carrying on sports, educational, or other 
 93.9   extracurricular activities is a separate organization from the 
 93.10  school district or school for purposes of applying the $10,000 
 93.11  limit.  This paragraph does not apply if the sales are derived 
 93.12  from admission charges or from activities for which the money 
 93.13  must be deposited with the school district treasurer under 
 93.14  section 123.38, subdivision 2, or be recorded in the same manner 
 93.15  as other revenues or expenditures of the school district under 
 93.16  section 123.38, subdivision 2b. 
 93.17     (b) All sales made by an organization for fundraising 
 93.18  purposes if that organization is a senior citizen group or 
 93.19  association of groups that in general limits membership to 
 93.20  persons age 55 or older and is organized and operated 
 93.21  exclusively for pleasure, recreation and other nonprofit 
 93.22  purposes and no part of the net earnings inure to the benefit of 
 93.23  any private shareholders.  This exemption shall apply only if 
 93.24  the gross annual sales receipts of the organization from 
 93.25  fundraising do not exceed $10,000. 
 93.26     (c) The gross receipts from the sales of tangible personal 
 93.27  property at, admission charges for, and sales of food, meals, or 
 93.28  drinks at fundraising events sponsored by a nonprofit 
 93.29  organization when the entire proceeds, except for the necessary 
 93.30  expenses therewith, will be used solely and exclusively for 
 93.31  charitable, religious, or educational purposes.  This exemption 
 93.32  does not apply to admission charges for events involving bingo 
 93.33  or other gambling activities or to charges for use of amusement 
 93.34  devices involving bingo or other gambling activities.  For 
 93.35  purposes of this ~~clause~~ paragraph, a "nonprofit organization" 
 93.36  means any unit of government, corporation, society, association, 
 94.1   foundation, or institution organized and operated for 
 94.2   charitable, religious, educational, civic, fraternal, senior 
 94.3   citizens' or veterans' purposes, no part of the net earnings of 
 94.4   which enures to the benefit of a private individual. 
 94.5      If the profits are not used solely and exclusively for 
 94.6   charitable, religious, or educational purposes, the entire gross 
 94.7   receipts are subject to tax. 
 94.8      Each nonprofit organization shall keep a separate 
 94.9   accounting record, including receipts and disbursements from 
 94.10  each fundraising event.  All deductions from gross receipts must 
 94.11  be documented with receipts and other records.  If records are 
 94.12  not maintained as required, the entire gross receipts are 
 94.13  subject to tax. 
 94.14     The exemption provided by this ~~section~~ paragraph does not 
 94.15  apply to any sale made by or in the name of a nonprofit 
 94.16  corporation as the active or passive agent of a person that is 
 94.17  not a nonprofit corporation. 
 94.18     The exemption for fundraising events under this ~~section~~ 
 94.19  paragraph is limited to no more than 24 days a year.  
 94.20  Fundraising events conducted on premises leased ~~or occupied~~ for 
 94.21  more than four days but less than 30 days do not qualify for 
 94.22  this exemption. 
 94.23     (d) The gross receipts from the sale or use of tickets or 
 94.24  admissions to a golf tournament held in Minnesota are exempt if 
 94.25  the beneficiary of the tournament's net proceeds qualifies as a 
 94.26  tax-exempt organization under section 501(c)(3) of the Internal 
 94.27  Revenue Code, including a tournament conducted on premises 
 94.28  leased or occupied for more than four days. 
 94.29     Sec. 25.  Minnesota Statutes 1995 Supplement, section 
 94.30  297B.01, subdivision 8, is amended to read: 
 94.31     Subd. 8.  [PURCHASE PRICE.] "Purchase price" means the 
 94.32  total consideration valued in money for a sale, whether paid in 
 94.33  money or otherwise.  The purchase price excludes the amount of a 
 94.34  manufacturer's rebate paid or payable to the purchaser.  If a 
 94.35  motor vehicle is taken in trade as a credit or as part payment 
 94.36  on a motor vehicle taxable under this chapter, the credit or 
 95.1   trade-in value allowed by the person selling the motor vehicle 
 95.2   shall be deducted from the total selling price to establish the 
 95.3   purchase price of the vehicle being sold and the trade-in 
 95.4   allowance allowed by the seller shall constitute the purchase 
 95.5   price of the motor vehicle accepted as a trade-in.  The purchase 
 95.6   price in those instances where the motor vehicle is acquired by 
 95.7   gift or by any other transfer for a nominal or no monetary 
 95.8   consideration shall also include the average value of similar 
 95.9   motor vehicles, established by standards and guides as 
 95.10  determined by the motor vehicle registrar.  The purchase price 
 95.11  in those instances where a motor vehicle is manufactured by a 
 95.12  person who registers it under the laws of this state shall mean 
 95.13  the manufactured cost of such motor vehicle and manufactured 
 95.14  cost shall mean the amount expended for materials, labor and 
 95.15  other properly allocable costs of manufacture, except that in 
 95.16  the absence of actual expenditures for the manufacture of a part 
 95.17  or all of the motor vehicle, manufactured costs shall mean the 
 95.18  reasonable value of the completed motor vehicle.  
 95.19     The term "purchase price" shall not include the portion of 
 95.20  the value of a motor vehicle due solely to modifications 
 95.21  necessary to make the motor vehicle handicapped accessible.  The 
 95.22  term "purchase price" shall not include the transfer of a motor 
 95.23  vehicle by way of gift between a husband and wife or parent and 
 95.24  child, nor shall it include the transfer of a motor vehicle by a 
 95.25  guardian to a ward when there is no monetary consideration and 
 95.26  the title to such vehicle was registered in the name of the 
 95.27  guardian, as guardian, only because the ward was a minor.  There 
 95.28  shall not be included in "purchase price" the amount of any tax 
 95.29  imposed by the United States upon or with respect to retail 
 95.30  sales whether imposed upon the retailer or the consumer.  
 95.31     The term "purchase price" shall not include the transfer of 
 95.32  a motor vehicle as a gift between a foster parent and foster 
 95.33  child.  For purposes of this subdivision, a foster relationship 
 95.34  exists, regardless of the age of the child, if (1) a foster 
 95.35  parent's home is or was licensed as a foster family home under 
 95.36  Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 
 96.1   county verifies that the child was a state ward or in permanent 
 96.2   foster care. 
 96.3      Sec. 26.  Laws 1991, chapter 291, article 8, section 27, is 
 96.4   amended by adding a subdivision to read: 
 96.5      Subd. 9.  [ADDITIONAL AUTHORITY; MANKATO MUNICIPAL 
 96.6   AIRPORT.] (a) In addition to the uses of revenues authorized in 
 96.7   subdivision 3, the city may use revenues received from taxes 
 96.8   authorized by subdivisions 1 and 2 to pay for rehabilitation, 
 96.9   expansion, improvement, and operation of the Mankato municipal 
 96.10  airport and related facilities, including securing or paying 
 96.11  debt service on bonds or other obligations issued to finance the 
 96.12  improvements. 
 96.13     (b) The city may issue general obligation bonds of the city 
 96.14  for the Mankato municipal airport and related facilities without 
 96.15  election under Minnesota Statutes, chapter 475, on the question 
 96.16  of issuance of the bonds or a tax to pay them.  The debt 
 96.17  represented by bonds issued for the Mankato municipal airport 
 96.18  and related facilities shall not be included in computing any 
 96.19  levy or debt limits applicable to the city. 
 96.20     (c) The total capital, administrative, and operating 
 96.21  expenses authorized in paragraph (a) payable from bond proceeds 
 96.22  and from the taxes authorized in subdivisions 1 and 2, excluding 
 96.23  investment earnings on bond proceeds and revenues, shall not 
 96.24  exceed $500,000 in any year, unless the city has dedicated in a 
 96.25  reserve fund sufficient funds to pay or secure payment of 
 96.26  principal and interest on bonds issued under subdivision 5 for a 
 96.27  period of at least one year.  The total amount of general 
 96.28  obligation bonds of the city issued for the Mankato municipal 
 96.29  airport and related facilities may not exceed $4,500,000. 
 96.30     (d) Notwithstanding the provisions of subdivision 4, the 
 96.31  authority of the city to impose taxes under subdivisions 1 and 2 
 96.32  shall not expire until the principal and interest on any bonds 
 96.33  or obligations issued to finance the Mankato municipal airport 
 96.34  and related facilities have been paid, or the city determines by 
 96.35  ordinance an earlier expiration date. 
 96.36     (e) This subdivision is effective the day after compliance 
 97.1   with Minnesota Statutes, section 645.021, subdivision 3, by the 
 97.2   governing body of the city of Mankato. 
 97.3      Sec. 27.  Laws 1992, chapter 511, article 8, section 39, is 
 97.4   amended to read: 
 97.5      Sec. 39.  [EFFECTIVE DATE.] 
 97.6      Sections 1, 2, 7, 8, 9, 11, 12, 24, and 28 are effective 
 97.7   the day after final enactment. 
 97.8      Sections 3 and 4 are effective for tax payments due for 
 97.9   sales made after September 30, 1992. 
 97.10     Sections 5 and 6 are effective July 1, 1992, and apply to 
 97.11  refunds filed after that date. 
 97.12     Sections 10, 13, 22, and 26 are effective for sales made 
 97.13  after June 30, 1992. 
 97.14     Sections 14, 15, and 18 are effective for sales made after 
 97.15  May 31, 1992. 
 97.16     Section 16 is effective retroactive for sales made after 
 97.17  June 30, 1991. 
 97.18     Section 19 is effective for all open tax years. 
 97.19     Sections 20 and 21 are effective for sales made after June 
 97.20  30, 1992, and before July 1, ~~1996~~ 1998. 
 97.21     Section 23 is effective for sales made on or after the date 
 97.22  of enactment, but prior to April 1, 1994. 
 97.23     Section 25 is effective for fiscal year 1993 and thereafter.
 97.24     Section 36 is effective the day following final enactment, 
 97.25  and upon approval by the governing body of the city of Duluth 
 97.26  pursuant to Minnesota Statutes, section 645.021. 
 97.27     Section 38 is effective for sales made after December 31, 
 97.28  1991. 
 97.29     Sec. 28.  Laws 1993, chapter 375, article 9, section 45, 
 97.30  subdivision 2, is amended to read: 
 97.31     Subd. 2.  [USE OF REVENUES.] Revenues received from taxes 
 97.32  authorized by subdivision 1 shall be used by Cook county 
 97.33     (1) to pay the cost of collecting the tax ~~and~~; 
 97.34     (2) to pay all or a portion of the costs of expanding and 
 97.35  improving the health care facility located in the county and 
 97.36  known as North Shore hospital; and 
 98.1      (3) to the extent revenues are available in excess of the 
 98.2   amount required to pay the costs described in clauses (1) and 
 98.3   (2), and only if approved by the Cook county board and the board 
 98.4   of directors of the North Shore hospital to pay all or a portion 
 98.5   of the costs of construction of the areas within a new school 
 98.6   facility in the county that are used as a community learning 
 98.7   center and an arts center.  Authorized costs include, but are 
 98.8   not limited to, securing or paying debt service on bonds or 
 98.9   other obligations issued to finance the expansion and 
 98.10  improvement of North Shore hospital.  The total capital 
 98.11  expenditures payable from bond proceeds, excluding investment 
 98.12  earnings on bond proceeds and tax revenues, shall not exceed 
 98.13  $4,000,000. 
 98.14     Sec. 29.  Laws 1995, chapter 375, article 9, section 45, 
 98.15  subdivision 3, is amended to read: 
 98.16     Subd. 3.  [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 
 98.17  LIMITATION.] The authority granted by subdivision 1 to Cook 
 98.18  county to impose a sales tax shall expire when the principal and 
 98.19  interest on any bonds or obligations issued to finance the 
 98.20  expansion and improvement of North Shore hospital have been paid 
 98.21  and the costs authorized to be paid under subdivision 2, clause 
 98.22  (3), have been paid, or at an earlier time as the county shall, 
 98.23  by resolution, determine.  Any funds remaining after completion 
 98.24  of the improvements and retirement or redemption of the 
 98.25  bonds and final payment of costs authorized to be paid under 
 98.26  subdivision 2, clause (3), may be placed in the general fund of 
 98.27  the county. 
 98.28     Sec. 30.  Laws 1995, chapter 264, article 2, section 40, is 
 98.29  amended to read: 
 98.30     Sec. 40.  [EVALUATION.] 
 98.31     The commissioner of revenue shall conduct an evaluation to 
 98.32  determine the accuracy of taxes paid by ~~counties~~ governmental 
 98.33  subdivisions on solid waste collection and disposal services as 
 98.34  required by Minnesota Statutes 1994, section 297A.45.  The 
 98.35  commissioner shall report, by January ~~1, 1996~~ 15, 1997, the 
 98.36  results of the evaluation, both in the aggregate and by ~~county~~ 
 99.1   governmental subdivision, to the chairs of the house committee 
 99.2   on taxes and the senate committee on taxes and tax laws, and to 
 99.3   the co-chairs of the legislative commission on waste 
 99.4   management.  The final results of the evaluation are classified 
 99.5   as public data.  The commissioner shall not initiate or continue 
 99.6   any action to collect any underpayment from ~~counties~~ 
 99.7   governmental subdivisions, or to reimburse any overpayment 
 99.8   to ~~counties~~ governmental subdivisions, of taxes on solid waste 
 99.9   collection and disposal services pursuant to Minnesota Statutes 
 99.10  1994, section 297A.45, until June 1, ~~1996~~ 1997.  The statute of 
 99.11  limitations for assessing, collecting, or refunding taxes 
 99.12  subject to the provisions of this section is tolled from the 
 99.13  date of enactment until June 1, ~~1996~~ 1997. 
 99.14     Sec. 31.  Laws 1995, chapter 264, article 2, section 42, 
 99.15  subdivision 1, is amended to read: 
 99.16     Subdivision 1.  [CREATION; MEMBERSHIP.] (a) A state 
 99.17  advisory council is established to study the general and motor 
 99.18  vehicle sales and use taxes under Minnesota Statutes 1994, 
 99.19  chapters 297A and 297B, and to make recommendations to the 1996 
 99.20  legislature and the 1997 legislature.  ~~The study shall be~~ 
 99.21  ~~completed and~~ Interim findings shall be reported to the 
 99.22  legislature by February 1, 1996.  The study shall be completed 
 99.23  and a final report submitted to the legislature by January 1, 
 99.24  1997. 
 99.25     (b) The advisory council consists of 17 members who serve 
 99.26  at the pleasure of the appointing authority as follows: 
 99.27     (1) ten legislators; five members of the senate, including 
 99.28  two members of the minority party, appointed by the subcommittee 
 99.29  on committees of the committee on rules and administration and 
 99.30  five members of the house of representatives, including two 
 99.31  members of the minority party, appointed by the speaker; 
 99.32     (2) the commissioner of revenue or the commissioner's 
 99.33  designee; and 
 99.34     (3) six members of the public; two appointed by the 
 99.35  subcommittee on committees of the committee on rules and 
 99.36  administration of the senate, two appointed by the speaker of