1.1                          A bill for an act
  1.2             relating to refinancing of government in this state; 
  1.3             reforming state and local government finance; 
  1.4             eliminating, consolidating, and replacing school 
  1.5             district levies; limiting referendum revenue; 
  1.6             proposing an amendment to the Minnesota Constitution 
  1.7             by adding sections to article X; dedicating a portion 
  1.8             of the sales tax to property tax relief for property 
  1.9             taxpayers in cities and towns; limiting property taxes 
  1.10            levied for public schools; reforming property tax 
  1.11            classifications; providing for local government aid; 
  1.12            changing property tax refunds and providing a separate 
  1.13            property tax refund schedule for farm homesteads; 
  1.14            changing the sales tax and providing a refundable 
  1.15            credit for sales taxes; reducing the franchise tax 
  1.16            rate and imposing a business activity tax; 
  1.17            appropriating money; amending Minnesota Statutes 1994, 
  1.18            sections 124.2711, subdivisions 1 and 5; 124.2713, 
  1.19            subdivision 1; 124.2714; 124.2715, subdivision 1; 
  1.20            124.2716, subdivision 2; 124.2725, subdivision 2; 
  1.21            124.2726, subdivision 3; 124.2727, subdivision 6a; 
  1.22            124.4945; 124.912, subdivisions 3 and 6; 124.914, 
  1.23            subdivisions 1, 2, 3, and 4; 124.916, subdivisions 3 
  1.24            and 4; 124.918, subdivision 8; 124A.03, by adding 
  1.25            subdivisions; 124A.292, subdivision 2; 273.1398, 
  1.26            subdivision 3; 290.06, subdivision 1; 290A.03, by 
  1.27            adding a subdivision; 290A.04, subdivisions 1, 2, 2a, 
  1.28            and by adding a subdivision; 297A.01, subdivision 16; 
  1.29            297A.15, subdivision 5; 297A.25, subdivision 29; 
  1.30            473F.02, subdivision 5; 473F.08, subdivision 3; 
  1.31            477A.011, subdivision 34, and by adding subdivisions; 
  1.32            477A.013, subdivisions 8 and 9; and Minnesota Statutes 
  1.33            1995 Supplement, sections 122.247, subdivision 3; 
  1.34            122.533; 124.2601, as amended; 124.2725, subdivisions 
  1.35            13, 14, and 15; 124.2726, subdivision 1; 124.312, 
  1.36            subdivision 5; 124.313; 124.3201, subdivision 1; 
  1.37            124.912, subdivisions 1 and 7; 124.916, subdivisions 1 
  1.38            and 2; 124A.22, subdivision 1; 273.13, subdivisions 24 
  1.39            and 25; 275.065, subdivision 3; 275.08, subdivision 
  1.40            1b; 276.04, subdivision 2; 290A.03, subdivisions 6 and 
  1.41            13; 290A.04, subdivision 6; 297A.01, subdivision 3; 
  1.42            and 477A.03, subdivision 2; proposing coding for new 
  1.43            law in Minnesota Statutes, chapters 124A; 290; and 
  1.44            297A; repealing Minnesota Statutes 1994, sections 
  1.45            122.531, subdivision 4a; 124.2711, subdivision 3; 
  1.46            124.2713, subdivisions 6a, 6b, and 7; 124.2715, 
  2.1             subdivision 2; 124.2716, subdivisions 3 and 4; 
  2.2             124.2725, subdivision 7; 124.2727, subdivisions 6b and 
  2.3             6c; 124.321, subdivisions 3, 4, and 5; 124.912, 
  2.4             subdivision 2; 124A.029; 124A.03, subdivisions 1b, 1d, 
  2.5             1e, 1f, 2b, and 3b; 124A.23, subdivisions 2, 3, and 5; 
  2.6             124A.292, subdivisions 3 and 4; 273.1398, subdivision 
  2.7             2; 290.0921; 290.0922; 297A.01, subdivisions 17 and 
  2.8             20; 297A.02, subdivisions 2 and 5; 297A.25, 
  2.9             subdivisions 8, 17, and 53; 477A.011, subdivisions 35 
  2.10            and 37; 477A.013, subdivision 6; and 477A.014, 
  2.11            subdivision 1a; Minnesota Statutes 1995 Supplement, 
  2.12            sections 124.2711, subdivision 2a; 124.2713, 
  2.13            subdivision 6; 124.2715, subdivision 3; 124.2725, 
  2.14            subdivisions 3, 4, and 15; 124.2727, subdivision 9; 
  2.15            124.312, subdivision 4; 124.314, subdivision 2; 
  2.16            124.321, subdivisions 1 and 2; 124A.03, subdivisions 
  2.17            1c and 2; 124A.22, subdivisions 13d and 13e; 124A.23, 
  2.18            subdivisions 1 and 4; 124A.24; and 477A.011, 
  2.19            subdivision 36. 
  2.20  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.21                             ARTICLE 1
  2.22                      CONSTITUTIONAL AMENDMENT
  2.23     Section 1.  [CONSTITUTIONAL AMENDMENT PROPOSED.] 
  2.24     An amendment to the Minnesota Constitution, adding sections 
  2.25  to article X, is proposed to the people. 
  2.26     If the amendment is adopted, the sections will read as 
  2.27  follows: 
  2.28     article X, section 9, will read: 
  2.29     Sec. 9.  A permanent property taxpayers' trust fund is 
  2.30  established in the state treasury.  The fund consists of the 
  2.31  revenues derived from a sales and use tax at a rate of ... 
  2.32  percent on all taxable sales, excluding motor vehicles, 
  2.33  including penalties and interest paid with respect to the sales 
  2.34  and use taxes.  If the legislature enacts changes in the sales 
  2.35  tax base in 1997 or any later year that are determined by the 
  2.36  legislature to increase the total sales tax base by more than 
  2.37  ... percent, the tax proceeds attributable to the change are not 
  2.38  included in the taxpayers' trust fund. 
  2.39     Funds in the property taxpayers' trust fund shall be 
  2.40  appropriated in the manner prescribed by law solely for property 
  2.41  tax relief for property taxpayers.  Fifty percent of the fund 
  2.42  shall be distributed to cities through a program designed to 
  2.43  compensate for differences in revenue need and differences in 
  2.44  property wealth among cities, and 50 percent of the fund shall 
  2.45  be distributed through a program designed to provide property 
  3.1   tax relief directly to homeowners and renters. 
  3.2      article X, section 10, will read: 
  3.3      Sec. 10.  The legislature may levy a tax on all taxable 
  3.4   property to help meet its duty under article XIII, section 1, to 
  3.5   establish a general and uniform system of public schools.  The 
  3.6   annual state property tax levy for public schools shall not 
  3.7   exceed .75 percent of the market value of the total taxable 
  3.8   property in the state.  All other property tax levies for public 
  3.9   schools are prohibited, except for:  (1) levies imposed by local 
  3.10  school districts with voter approval at a general election to 
  3.11  pay for capital construction and capital improvements of school 
  3.12  facilities and equipment, or to pay debt to finance capital 
  3.13  facilities; (2) referendum levies approved prior to November 8, 
  3.14  1996, but only until the termination date set for those levies 
  3.15  as of that date; (3) levies to pay general obligation debt 
  3.16  issued before January 1, 1997; and (4) levies imposed by local 
  3.17  school districts for school operations with voter approval after 
  3.18  November 7, 1996, in an amount that does not exceed 20 percent 
  3.19  of the amount of aid per student provided by the state to that 
  3.20  school district.  The legislature by law shall provide for an 
  3.21  equal amount for the public education of each student in similar 
  3.22  circumstances, except the legislature may allow more funds for 
  3.23  school districts spending more at the adoption of this amendment 
  3.24  until each school district in Minnesota spends the same amount 
  3.25  for each student in similar circumstances. 
  3.26     Sec. 2.  [SUBMISSION TO VOTERS.] 
  3.27     The proposed amendment must be submitted to the people at 
  3.28  the 1996 general election.  The question submitted shall be: 
  3.29     "Shall the Minnesota Constitution be amended to limit state 
  3.30  and local property taxes for public education and dedicate .... 
  3.31  cents of the sales and use tax to a property taxpayers' trust 
  3.32  fund to be used for property tax relief for property taxpayers 
  3.33  of cities and towns? 
  3.34                                     Yes .......
  3.35                                     No ........"
  3.36                             ARTICLE 2 
  4.1                       EDUCATION FINANCE REFORM 
  4.2      Section 1.  Minnesota Statutes 1995 Supplement, section 
  4.3   122.247, subdivision 3, is amended to read: 
  4.4      Subd. 3.  [TRANSITIONAL ~~LEVY~~ REVENUE.] The board of the 
  4.5   combined district, or the boards of combining districts that 
  4.6   have received voter approval for the combination under section 
  4.7   122.243, subdivision 2, ~~may levy~~ are eligible for state aid to 
  4.8   pay for the expenses of negotiation, administrative expenses 
  4.9   directly related to the transition from cooperation to 
  4.10  combination, and the cost of necessary new athletic and music 
  4.11  uniforms.  ~~The board or boards may levy this amount over three~~ 
  4.12  ~~or fewer years.~~  All expenses must be approved by the 
  4.13  commissioner of children, families, and learning.  The 
  4.14  commissioner may pay this state aid over three or fewer years.  
  4.15     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
  4.16  122.533, is amended to read: 
  4.17     122.533 [EXPENSES OF TRANSITION.] 
  4.18     The board of a district to which a dissolved district is 
  4.19  attached pursuant to section 122.22, ~~may,~~ is eligible for state 
  4.20  aid for the purpose of paying the expenses of negotiations and 
  4.21  other administrative expenses relating to the transition~~,~~.  The 
  4.22  board of the district may enter into agreements with banks or 
  4.23  any person to take its orders at any rate of interest not to 
  4.24  exceed seven percent per annum.  These orders shall be paid by 
  4.25  the treasurer of the district from district funds after the 
  4.26  effective date of the dissolution and attachment.  
  4.27  Notwithstanding the provisions of sections 124.226, 124.2716, 
  4.28  124.91, 124.912, 124.914, 124.916, and 124.918, the district ~~may~~ 
  4.29  is, in the year the dissolution and attachment becomes 
  4.30  effective, ~~levy~~ eligible for state aid in an amount equal to the 
  4.31  amount of the orders issued pursuant to this subdivision and the 
  4.32  interest on these orders.  No district shall issue orders for 
  4.33  funds ~~or make a levy pursuant~~ according to this subdivision 
  4.34  without the commissioner's approval of the expenses to be paid 
  4.35  with the funds from the orders and ~~levy~~ state aid. 
  4.36     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
  5.1   124.2601, as amended by Laws 1995, First Special Session chapter 
  5.2   3, article 16, section 13, is amended to read: 
  5.3      124.2601 [ADULT BASIC EDUCATION AID.] 
  5.4      Subdivision 1.  [FULL-TIME EQUIVALENT.] In this section 
  5.5   "full-time equivalent" means 408 contact hours for a student at 
  5.6   the adult secondary instructional level and 240 contact hours 
  5.7   for a student at a lower instructional level.  "Full-time 
  5.8   equivalent" for an English as a second language student means 
  5.9   240 contact hours. 
  5.10     Subd. 2.  [PROGRAMS FUNDED.] Adult basic education programs 
  5.11  established under section 124.26 and approved by the 
  5.12  commissioner are eligible for ~~revenue~~ aid under this section. 
  5.13     Subd. 3.  [AID.] Adult basic education aid for each 
  5.14  approved program equals the sum of 65 percent of the general 
  5.15  education formula allowance times the number of full-time 
  5.16  equivalent students in its adult basic education program and an 
  5.17  amount equal to .12 percent times the district's adjusted net 
  5.18  tax capacity for assessment year 1994. 
  5.19     Subd. 4.  ~~[LEVY.] A district with an eligible program may~~ 
  5.20  ~~levy an amount not to exceed the amount raised by .12 percent~~ 
  5.21  ~~times the adjusted tax capacity of the district for the~~ 
  5.22  ~~preceding year.~~ 
  5.23     ~~Subd. 5.  [REVENUE.] Adult basic education revenue is equal~~ 
  5.24  ~~to the sum of an approved program's adult basic education aid~~ 
  5.25  ~~and its adult basic education levy.~~ 
  5.26     ~~Subd. 6.  [AID GUARANTEE.] (a) For fiscal year 1994, any~~ 
  5.27  ~~adult basic education program that receives less state aid under~~ 
  5.28  ~~subdivisions 3 and 7 than from the aid formula for fiscal year~~ 
  5.29  ~~1992 shall receive the amount of aid it received in fiscal year~~ 
  5.30  ~~1992.~~ 
  5.31     ~~(b) For 1995 and later fiscal years, an adult basic~~ 
  5.32  ~~education program that receives aid shall receive at least the~~ 
  5.33  ~~amount of aid it received in fiscal year 1992 under subdivisions~~ 
  5.34  ~~3 and 7, plus aid equal to the amount of revenue that would have~~ 
  5.35  ~~been raised for taxes payable in 1994 under Minnesota Statutes~~ 
  5.36  ~~1992, section 124.2601, subdivision 4, minus the amount raised~~ 
  6.1   ~~under subdivision 4.~~ 
  6.2      ~~Subd. 7.~~  [PRORATION.] If the total appropriation for adult 
  6.3   basic education aid is insufficient to pay all approved programs 
  6.4   the full amount of aid earned, the department of children, 
  6.5   families, and learning shall proportionately reduce each 
  6.6   approved program's aid. 
  6.7      Sec. 4.  Minnesota Statutes 1994, section 124.2711, 
  6.8   subdivision 1, is amended to read: 
  6.9      Subdivision 1.  [~~REVENUE~~ AID.] ~~The revenue~~ State aid for 
  6.10  early childhood family education programs for a school district 
  6.11  equals $101.25 ~~for 1993 and later fiscal years~~ times the greater 
  6.12  of: 
  6.13     (1) 150; or 
  6.14     (2) the number of people under five years of age residing 
  6.15  in the school district on October 1 of the previous school year. 
  6.16     Sec. 5.  Minnesota Statutes 1994, section 124.2711, 
  6.17  subdivision 5, is amended to read: 
  6.18     Subd. 5.  [HOME VISITING ~~LEVY~~ AID.] A school district that 
  6.19  enters into a collaborative agreement to provide education 
  6.20  services and social services to families with young children ~~may~~ 
  6.21  ~~levy an amount~~ is eligible for state aid equal to $1.60 times 
  6.22  the number of people under five years of age residing in the 
  6.23  district on September 1 of the last school year.  ~~Levy revenue~~ 
  6.24  ~~under this subdivision shall not be included as revenue under~~ 
  6.25  ~~subdivision 1.~~  The revenue shall be used for home visiting 
  6.26  programs under section 121.882, subdivision 2b. 
  6.27     Sec. 6.  Minnesota Statutes 1994, section 124.2713, 
  6.28  subdivision 1, is amended to read: 
  6.29     Subdivision 1.  [TOTAL COMMUNITY EDUCATION REVENUE.] 
  6.30  Community education revenue equals the sum of a district's 
  6.31  general community education revenue and youth service program 
  6.32  revenue.  Community education revenue is provided entirely 
  6.33  through state aid.  
  6.34     Sec. 7.  Minnesota Statutes 1994, section 124.2714, is 
  6.35  amended to read: 
  6.36     124.2714 [ADDITIONAL COMMUNITY EDUCATION REVENUE.] 
  7.1      (a) A district that is eligible under section 124.2713, 
  7.2   subdivision 2, ~~may levy an amount up~~ is eligible for aid equal 
  7.3   to the amount of revenue authorized by Minnesota Statutes 1986, 
  7.4   section 275.125, subdivision 8, clause (2).  
  7.5      (b) Beginning with ~~levies~~ revenue for fiscal year 1995, 
  7.6   this ~~levy~~ revenue must be reduced each year by the amount of any 
  7.7   increase in the ~~levying~~ district's general community education 
  7.8   revenue under section 124.2713, subdivision 3, for that fiscal 
  7.9   year over the amount received by the district under section 
  7.10  124.2713, subdivision 3, for fiscal year 1994. 
  7.11     (c) The ~~proceeds of the levy~~ revenue may be used for the 
  7.12  purposes set forth in section 124.2713, subdivision 8. 
  7.13     Sec. 8.  Minnesota Statutes 1994, section 124.2715, 
  7.14  subdivision 1, is amended to read: 
  7.15     Subdivision 1.  [REVENUE AMOUNT.] A district that is 
  7.16  eligible according to section 124.2713, subdivision 2, may 
  7.17  receive revenue for a program for adults with disabilities.  
  7.18  Revenue for the program for adults with disabilities for a 
  7.19  district or a group of districts equals the lesser of:  
  7.20     (1) the actual expenditures for approved programs and 
  7.21  budgets; or 
  7.22     (2) $60,000.  
  7.23     Revenue is provided through state aid. 
  7.24     Sec. 9.  Minnesota Statutes 1994, section 124.2716, 
  7.25  subdivision 2, is amended to read: 
  7.26     Subd. 2.  [EXTENDED DAY REVENUE.] The extended day revenue 
  7.27  for an eligible school district equals the approved additional 
  7.28  cost of providing services to children with disabilities or 
  7.29  children experiencing family or related problems of a temporary 
  7.30  nature who participate in the extended day program.  Extended 
  7.31  day revenue is provided through state aid.  
  7.32     Sec. 10.  Minnesota Statutes 1994, section 124.2725, 
  7.33  subdivision 2, is amended to read: 
  7.34     Subd. 2.  [COOPERATION AND COMBINATION REVENUE.] 
  7.35  Cooperation and combination revenue equals $100 times the pupil 
  7.36  units served in the district.  For purposes of this section, 
  8.1   pupil units served means the number of resident and nonresident 
  8.2   pupil units in average daily membership receiving instruction in 
  8.3   the cooperating or combined district.  A district may not 
  8.4   receive revenue under this section if it ~~levies~~ receives revenue 
  8.5   under section 124.912, subdivision 4.  Cooperation and 
  8.6   combination revenue is provided through state aid.  
  8.7      Sec. 11.  Minnesota Statutes 1995 Supplement, section 
  8.8   124.2725, subdivision 13, is amended to read: 
  8.9      Subd. 13.  [FAILURE TO COMBINE.] A district has failed to 
  8.10  combine if the commissioner disapproves of the plan according to 
  8.11  section 122.243, subdivision 1, or if a third referendum fails 
  8.12  under section 122.243, subdivision 2, or if the commissioner of 
  8.13  children, families, and learning determines that the districts 
  8.14  involved are not making sufficient progress toward combination. 
  8.15     (a) If a district has failed to combine, cooperation and 
  8.16  combination aid under subdivisions 5 and 6 shall not be paid ~~and~~ 
  8.17  ~~the authority to levy under subdivision 4 ceases~~.  The 
  8.18  commissioner shall reduce other aids due the district to recover 
  8.19  an amount equal to the aid paid under subdivision 6 plus the 
  8.20  difference between the aid paid under subdivision 5 and the aid 
  8.21  that would have been paid if the revenue had been $50 times the 
  8.22  pupil units served.  
  8.23     (b) If a district has failed to combine, the ~~authority to~~ 
  8.24  ~~levy~~ eligibility for revenue for reorganization operating debt 
  8.25  under section 122.531, subdivision 4a, and for severance pay or 
  8.26  early retirement incentives under subdivision 15 ceases. 
  8.27     Sec. 12.  Minnesota Statutes 1995 Supplement, section 
  8.28  124.2725, subdivision 14, is amended to read: 
  8.29     Subd. 14.  [CESSATION OF REVENUE.] At any time the 
  8.30  districts cease cooperating, aid shall not be paid ~~and the~~ 
  8.31  ~~authority to levy ceases.  If a district ceases to cooperate for~~ 
  8.32  ~~all or a portion of a fiscal year for which a levy has been~~ 
  8.33  ~~certified under subdivision 3, the department of children,~~ 
  8.34  ~~families, and learning shall adjust the next levy certified by~~ 
  8.35  ~~the district by an amount in proportion to the part of the~~ 
  8.36  ~~fiscal year that the district did not cooperate~~. 
  9.1      Sec. 13.  Minnesota Statutes 1995 Supplement, section 
  9.2   124.2725, subdivision 15, is amended to read: 
  9.3      Subd. 15.  [RETIREMENT AND SEVERANCE ~~LEVY~~ AID.] A 
  9.4   cooperating or combined district that levied under subdivision 3 
  9.5   for taxes payable in 1995 ~~may levy~~ is eligible for state aid for 
  9.6   severance pay or early retirement incentives for licensed and 
  9.7   nonlicensed employees who retire early as a result of the 
  9.8   cooperation or combination.  All severance pay agreements or 
  9.9   early retirement incentives for licensed and nonlicensed 
  9.10  employees who retire early as a result of the cooperation and 
  9.11  combination must be approved by the commissioner. 
  9.12     Sec. 14.  Minnesota Statutes 1995 Supplement, section 
  9.13  124.2726, subdivision 1, is amended to read: 
  9.14     Subdivision 1.  [ELIGIBILITY AND USE.] A school district 
  9.15  that has been reorganized after June 30, 1994, under section 
  9.16  122.23 is eligible for consolidation transition revenue. Revenue 
  9.17  is equal to the sum of aid under ~~subdivision~~ subdivisions 2 
  9.18  and ~~levy under subdivision~~ 3.  Consolidation transition revenue 
  9.19  may only be used according to this section.  Revenue must be 
  9.20  used for the following purposes and may be distributed among 
  9.21  these purposes at the discretion of the district: 
  9.22     (1) to offer early retirement incentives as provided by 
  9.23  section 122.23, subdivision 20; 
  9.24     (2) to reduce operating debt as defined in section 121.915; 
  9.25     (3) to enhance learning opportunities for students in the 
  9.26  reorganized district; and 
  9.27     (4) for other costs incurred in the reorganization. 
  9.28     Revenue received and utilized under clause (3) or (4) may 
  9.29  be expended for operating, facilities, and/or equipment.  
  9.30  Revenue received under this section shall not be included in the 
  9.31  determination of the reduction under section 124A.26, 
  9.32  subdivision 1.  
  9.33     Sec. 15.  Minnesota Statutes 1994, section 124.2726, 
  9.34  subdivision 3, is amended to read: 
  9.35     Subd. 3.  [~~LEVY~~ ADDITIONAL AID.] If the aid available in 
  9.36  subdivision 2 is insufficient to cover the costs of the district 
 10.1   under section 122.23, subdivision 20, the district may ~~levy~~ 
 10.2   apply to the commissioner for state aid to cover the difference 
 10.3   over a period of time not to exceed three years.  
 10.4      Sec. 16.  Minnesota Statutes 1994, section 124.2727, 
 10.5   subdivision 6a, is amended to read: 
 10.6      Subd. 6a.  [DISTRICT COOPERATION REVENUE.] A district's 
 10.7   cooperation revenue is equal to the greater of $67 times the 
 10.8   actual pupil units or $25,000.  District cooperation revenue is 
 10.9   provided through state aid. 
 10.10     Sec. 17.  Minnesota Statutes 1995 Supplement, section 
 10.11  124.312, subdivision 5, is amended to read: 
 10.12     Subd. 5.  [INTEGRATION AID.] ~~For fiscal year 1996 and later~~ 
 10.13  ~~fiscal years~~ Integration revenue is provided through state aid 
 10.14  and equals the following amounts: 
 10.15     (1) for independent school district No. 709, Duluth, 
 10.16  $1,385,000 plus the sum of $660,000 and an amount equal to two 
 10.17  percent times the district's adjusted net tax capacity for 
 10.18  assessment year 1994; 
 10.19     (2) for independent school district No. 625, St. Paul, 
 10.20  $8,090,700 plus the product of $197 and the district's actual 
 10.21  pupil units for that year; and 
 10.22     (3) for special school district No. 1, Minneapolis, 
 10.23  $9,368,300 plus the product of $197 and the district's actual 
 10.24  pupil units for that year. 
 10.25     Sec. 18.  Minnesota Statutes 1995 Supplement, section 
 10.26  124.313, is amended to read: 
 10.27     124.313 [TARGETED NEEDS REVENUE.] 
 10.28     For fiscal year 1996 and thereafter, a school district's 
 10.29  targeted needs revenue equals the sum of: 
 10.30     (1) assurance of mastery revenue according to section 
 10.31  124.311; plus 
 10.32     (2) the district's limited English proficiency revenue 
 10.33  computed according to section 124.273, subdivision 1d; plus 
 10.34     (3) integration revenue computed according to section 
 10.35  124.312~~, subdivision 4~~. 
 10.36     Sec. 19.  Minnesota Statutes 1995 Supplement, section 
 11.1   124.3201, subdivision 1, is amended to read: 
 11.2      Subdivision 1.  [DEFINITIONS.] For the purposes of this 
 11.3   section and sections 124.3202 and 124.321, the definitions in 
 11.4   this subdivision apply. 
 11.5      (a) "Base year" for fiscal year 1996 means fiscal year 1995.
 11.6   Base year for later fiscal years means the second fiscal year 
 11.7   preceding the fiscal year for which aid will be paid. 
 11.8      (b) "Basic revenue" has the meaning given it in section 
 11.9   124A.22, subdivision 2.  For the purposes of computing basic 
 11.10  revenue pursuant to this section, each child with a disability 
 11.11  shall be counted as prescribed in section 124.17, subdivision 1. 
 11.12     (c) "Essential personnel" means teachers, related services, 
 11.13  and support services staff providing direct services to students.
 11.14     (d) "Average daily membership" has the meaning given it in 
 11.15  section 124.17. 
 11.16     (e) "Program growth factor" means 1.00 for fiscal year 1998 
 11.17  and later. 
 11.18     (f) "Aid percentage factor" means 60 percent for fiscal 
 11.19  year 1996, 70 percent for fiscal year 1997, 80 percent for 
 11.20  fiscal year 1998, ~~90 percent for fiscal year 1999,~~ and 100 
 11.21  percent for fiscal years ~~2000~~ 1999 and later. 
 11.22     (g) "Levy percentage factor" means 100 minus the aid 
 11.23  percentage factor for that year. 
 11.24     Sec. 20.  Minnesota Statutes 1994, section 124.4945, is 
 11.25  amended to read: 
 11.26     124.4945 [~~LEVY~~ STATE AID FOR SEVERANCE PAY.] 
 11.27     A joint powers board established under section 124.494 ~~may~~ 
 11.28  ~~make a levy~~ is eligible to receive state aid to provide 
 11.29  severance pay and early retirement incentives under section 
 11.30  125.611, for any teacher as defined under section 125.12, 
 11.31  subdivision 1, who is placed on unrequested leave as a result of 
 11.32  the cooperative secondary facility agreement.  ~~A joint powers~~ 
 11.33  ~~board making a levy shall certify to each participating district~~ 
 11.34  ~~tax levies sufficient to raise the amount necessary to provide~~ 
 11.35  ~~the district's portion of severance pay and early retirement~~ 
 11.36  ~~incentives.  The tax levy certified to each district must be~~ 
 12.1   ~~expressed as a local tax rate, that, when applied to the~~ 
 12.2   ~~adjusted net tax capacity of all of the participating districts~~ 
 12.3   ~~raises the amount necessary to provide severance pay and early~~ 
 12.4   ~~retirement incentives.  Each participating school district shall~~ 
 12.5   ~~include the levy in the next tax roll which it shall certify to~~ 
 12.6   ~~the county auditor, and shall remit the collections of the levy~~ 
 12.7   ~~to the joint powers board.~~ 
 12.8      Sec. 21.  Minnesota Statutes 1995 Supplement, section 
 12.9   124.912, subdivision 1, is amended to read: 
 12.10     Subdivision 1.  [STATUTORY OBLIGATIONS.] ~~(a)~~ A school 
 12.11  district ~~may levy~~ is eligible for state aid for the amount 
 12.12  authorized for liabilities of dissolved districts pursuant to 
 12.13  section 122.45; the amounts necessary to pay the district's 
 12.14  obligations under section 268.06, subdivision 25; the amounts 
 12.15  necessary to pay for job placement services offered to employees 
 12.16  who may become eligible for benefits pursuant to section 268.08; 
 12.17  the amounts necessary to pay the district's obligations under 
 12.18  section 127.05; the amounts authorized by section 122.531; the 
 12.19  amounts necessary to pay the district's obligations under 
 12.20  section 122.533; and for severance pay required by sections 
 12.21  120.08, subdivision 3, and 122.535, subdivision 6. 
 12.22     ~~(b) An education district that negotiates a collective~~ 
 12.23  ~~bargaining agreement for teachers under section 122.937 may~~ 
 12.24  ~~certify to the department of children, families, and learning~~ 
 12.25  ~~the amount necessary to pay all of the member districts'~~ 
 12.26  ~~obligations and the education district's obligations under~~ 
 12.27  ~~section 268.06, subdivision 25.~~ 
 12.28     ~~The department of children, families, and learning must~~ 
 12.29  ~~allocate the levy amount proportionately among the member~~ 
 12.30  ~~districts based on adjusted net tax capacity.  The member~~ 
 12.31  ~~districts must levy the amount allocated.~~ 
 12.32     ~~(c) Each year, a member district of an education district~~ 
 12.33  ~~that levies under this subdivision must transfer the amount of~~ 
 12.34  ~~revenue certified under paragraph (b) to the education district~~ 
 12.35  ~~board according to this subdivision.  By June 20 and November 30~~ 
 12.36  ~~of each year, an amount must be transferred equal to:~~ 
 13.1      ~~(1) 50 percent times~~ 
 13.2      ~~(2) the amount certified in paragraph (b) minus homestead~~ 
 13.3   ~~and agricultural credit aid allocated for that levy according to~~ 
 13.4   ~~section 273.1398, subdivision 6.~~ 
 13.5      Sec. 22.  Minnesota Statutes 1994, section 124.912, 
 13.6   subdivision 3, is amended to read: 
 13.7      Subd. 3.  [RULE COMPLIANCE.] Each year a district that is 
 13.8   required to implement a plan according to the requirements of 
 13.9   Minnesota Rules, parts 3535.0200 to 3535.2200, ~~may levy~~ is 
 13.10  eligible for state aid in an amount ~~not to exceed a net tax rate~~ 
 13.11  ~~of~~ equal to 2.0 percent times the adjusted net tax capacity of 
 13.12  the district for ~~taxes payable in 1991 and thereafter~~ the 
 13.13  preceding year.  A district that ~~levies~~ receives integration 
 13.14  revenue according to ~~subdivision 2 may not levy according to~~ 
 13.15  section 124.312 is not eligible for state aid under this 
 13.16  subdivision.  ~~Notwithstanding section 121.904, the entire amount~~ 
 13.17  ~~of this levy shall be recognized as revenue for the fiscal year~~ 
 13.18  ~~in which the levy is certified.  This levy shall not be~~ 
 13.19  ~~considered in computing the aid reduction under section 124.155.~~ 
 13.20     Sec. 23.  Minnesota Statutes 1994, section 124.912, 
 13.21  subdivision 6, is amended to read: 
 13.22     Subd. 6.  [CRIME RELATED COSTS.] ~~For taxes levied in 1991~~ 
 13.23  ~~and subsequent years, payable in 1992 and subsequent years, each~~ 
 13.24  ~~school district may make a levy on all taxable property located~~ 
 13.25  ~~within the school district for the purposes specified in this~~ 
 13.26  ~~subdivision.  The maximum amount which may be levied for all~~ 
 13.27  ~~costs under this subdivision shall be equal to~~ State aid for 
 13.28  crime related costs equals $1 multiplied by the population of 
 13.29  the school district.  For purposes of this subdivision, 
 13.30  "population" of the school district means the same as contained 
 13.31  in section 275.14.  The ~~proceeds of the levy~~ state aid must be 
 13.32  used for reimbursing the cities and counties who contract with 
 13.33  the school district for the following purposes:  (1) to pay the 
 13.34  costs incurred for the salaries, benefits, and transportation 
 13.35  costs of peace officers and sheriffs for liaison services in the 
 13.36  district's middle and secondary schools and (2) to pay the costs 
 14.1   for a drug abuse prevention program as defined in Minnesota 
 14.2   Statutes 1991 Supplement, section 609.101, subdivision 3, 
 14.3   paragraph (f) in the elementary schools.  The school district 
 14.4   must initially attempt to contract for these services with the 
 14.5   police department of each city or the sheriff's department of 
 14.6   the county within the school district containing the school 
 14.7   receiving the services.  If a local police department or a 
 14.8   county sheriff's department does not wish to provide the 
 14.9   necessary services, the district may contract for these services 
 14.10  with any other police or sheriff's department located entirely 
 14.11  or partially within the school district's boundaries.  ~~The levy~~ 
 14.12  ~~authorized under this subdivision is not included in determining~~ 
 14.13  ~~the school district's levy limitations.~~ 
 14.14     Sec. 24.  Minnesota Statutes 1995 Supplement, section 
 14.15  124.912, subdivision 7, is amended to read: 
 14.16     Subd. 7.  [ICE ARENA LEVY.] (a) Each year, an independent 
 14.17  school district operating and maintaining an ice arena, ~~may levy~~ 
 14.18  is eligible for state aid for the net operational costs of the 
 14.19  ice arena.  The ~~levy~~ amount of state aid may not exceed the net 
 14.20  actual costs of operation of the arena for the previous year.  
 14.21  Net actual costs are defined as operating costs less any 
 14.22  operating revenues. 
 14.23     (b) Any school district operating and maintaining an ice 
 14.24  arena must demonstrate to the satisfaction of the office of 
 14.25  monitoring in the department of children, families, and learning 
 14.26  that the district will offer equal sports opportunities for male 
 14.27  and female students to use its ice arena, particularly in areas 
 14.28  of access to prime practice time, team support, and providing 
 14.29  junior varsity and younger level teams for girls' ice sports and 
 14.30  ice sports offerings. 
 14.31     Sec. 25.  Minnesota Statutes 1994, section 124.914, 
 14.32  subdivision 1, is amended to read: 
 14.33     Subdivision 1.  [1977 STATUTORY OPERATING DEBT.] (1) In 
 14.34  each year in which so required by this subdivision, a district 
 14.35  ~~shall make an additional levy~~ is eligible for state aid to 
 14.36  eliminate its statutory operating debt, determined as of June 
 15.1   30, 1977, and certified and adjusted by the commissioner.  
 15.2   ~~This~~ State aid payments for fiscal years 1999 and later and the 
 15.3   previous local levy shall not be made in more than 30 successive 
 15.4   years and each year before it is made, it must be approved by 
 15.5   the commissioner and the approval shall specify its amount.  
 15.6   ~~This levy shall be an amount which is equal to the amount raised~~ 
 15.7   ~~by a levy of a net tax rate of 1.66 percent times the adjusted~~ 
 15.8   ~~net tax capacity of the district for the preceding year for~~ 
 15.9   ~~taxes payable in 1991 and thereafter; provided that in the last~~ 
 15.10  ~~year in which the district is required to make this levy, it~~ 
 15.11  ~~shall levy an amount not to exceed the amount raised by a levy~~ 
 15.12  ~~of a net tax rate of 1.66 percent times the adjusted net tax~~ 
 15.13  ~~capacity of the district for the preceding year for taxes~~ 
 15.14  ~~payable in 1991 and thereafter.~~  The state aid for each district 
 15.15  equals the amount raised by the levy for this purpose for taxes 
 15.16  payable in 1997.  When the sum of the cumulative ~~levies made~~ 
 15.17  ~~pursuant~~ revenue received according to this subdivision and 
 15.18  transfers made according to section 121.912, subdivision 4, 
 15.19  equals an amount equal to the statutory operating debt of the 
 15.20  district, the ~~levy~~ state aid shall be discontinued. 
 15.21     (2) The district shall establish a special account in the 
 15.22  general fund which shall be designated "appropriated fund 
 15.23  balance reserve account for purposes of reducing statutory 
 15.24  operating debt" on its books and records.  This account shall 
 15.25  reflect the ~~levy~~ revenue authorized pursuant to this subdivision.
 15.26  The proceeds of this ~~levy~~ revenue shall be used only for cash 
 15.27  flow requirements and shall not be used to supplement district 
 15.28  revenues or income for the purposes of increasing the district's 
 15.29  expenditures or budgets. 
 15.30     (3) ~~Any district which is required to levy pursuant to this~~ 
 15.31  ~~subdivision shall certify the maximum levy allowable under~~ 
 15.32  ~~section 124A.23, subdivision 2, in that same year.~~ 
 15.33     ~~(4)~~ Each district shall make permanent fund balance 
 15.34  transfers so that the total statutory operating debt of the 
 15.35  district is reflected in the general fund as of June 30, 1977. 
 15.36     Sec. 26.  Minnesota Statutes 1994, section 124.914, 
 16.1   subdivision 2, is amended to read: 
 16.2      Subd. 2.  [1983 OPERATING DEBT.] (1) Each year, a 
 16.3   district ~~may make an additional levy~~ is eligible for state aid 
 16.4   to eliminate a deficit in the net unappropriated operating funds 
 16.5   of the district, determined as of June 30, 1983, and certified 
 16.6   and adjusted by the commissioner.  This ~~levy may in each year be~~ 
 16.7   ~~an amount not to exceed the amount raised by a levy of a net tax~~ 
 16.8   ~~rate of 1.85 percent times the adjusted net tax capacity for~~ 
 16.9   ~~taxes payable in 1991 and thereafter of the district for the~~ 
 16.10  ~~preceding year as determined by the commissioner~~ state aid for 
 16.11  each district equals the amount raised by the district's levy 
 16.12  for this purpose for taxes payable in 1997.  However, the total 
 16.13  amount of this ~~levy~~ revenue for all years it is ~~made~~ received 
 16.14  shall not exceed the lesser of (a) the amount of the deficit in 
 16.15  the net unappropriated operating funds of the district as of 
 16.16  June 30, 1983, or (b) the amount of the aid reduction, according 
 16.17  to Laws 1981, Third Special Session chapter 2, article 2, 
 16.18  section 2, but excluding clauses (l), (m), (n), (o), and (p), 
 16.19  and Laws 1982, Third Special Session chapter 1, article 3, 
 16.20  section 6, to the district in fiscal year 1983.  When the 
 16.21  cumulative ~~levies made pursuant~~ revenue received according to 
 16.22  this subdivision ~~equal~~ equals the total amount permitted by this 
 16.23  subdivision, the ~~levy~~ state aid shall be discontinued.  
 16.24     (2) The proceeds of this ~~levy~~ state aid shall be used only 
 16.25  for cash flow requirements and shall not be used to supplement 
 16.26  district revenues or income for the purposes of increasing the 
 16.27  district's expenditures or budgets.  
 16.28     ~~(3) Any district that levies pursuant to this subdivision~~ 
 16.29  ~~shall certify the maximum levy allowable under section 124A.23,~~ 
 16.30  ~~subdivisions 2 and 2a, in that same year.~~ 
 16.31     Sec. 27.  Minnesota Statutes 1994, section 124.914, 
 16.32  subdivision 3, is amended to read: 
 16.33     Subd. 3.  [1985 OPERATING DEBT.] (1) Each year, a 
 16.34  district ~~may levy~~ is eligible for state aid to eliminate a 
 16.35  deficit in the net unappropriated balance in the general fund of 
 16.36  the district, determined as of June 30, 1985, and certified and 
 17.1   adjusted by the commissioner.  Each year ~~this levy may be an~~ 
 17.2   ~~amount not to exceed the amount raised by a levy of a net tax~~ 
 17.3   ~~rate of 1.85 percent times the adjusted net tax capacity for~~ 
 17.4   ~~taxes payable in 1991 and thereafter of the district for the~~ 
 17.5   ~~preceding year~~ the state aid for each district equals the amount 
 17.6   raised by the district's levy for this purpose for taxes payable 
 17.7   in 1997.  However, the total amount of this ~~levy~~ revenue for all 
 17.8   years it is ~~made~~ received shall not exceed the amount of the 
 17.9   deficit in the net unappropriated balance in the general fund of 
 17.10  the district as of June 30, 1985.  When the cumulative ~~levies~~ 
 17.11  ~~made pursuant to~~ revenue received under this subdivision ~~equal~~ 
 17.12  equals the total amount permitted by this subdivision, the ~~levy~~ 
 17.13  state aid shall be discontinued.  
 17.14     (2) A district, if eligible, may ~~levy~~ receive revenue under 
 17.15  this subdivision or subdivision 2, but not both. 
 17.16     (3) The proceeds of this ~~levy~~ revenue shall be used only 
 17.17  for cash flow requirements and shall not be used to supplement 
 17.18  district revenues or income for the purposes of increasing the 
 17.19  district's expenditures or budgets.  
 17.20     ~~(4) Any district that levies pursuant to this subdivision~~ 
 17.21  ~~shall certify the maximum levy allowable under section 124A.23,~~ 
 17.22  ~~subdivision 2, in that same year.~~ 
 17.23     Sec. 28.  Minnesota Statutes 1994, section 124.914, 
 17.24  subdivision 4, is amended to read: 
 17.25     Subd. 4.  [1992 OPERATING DEBT.] (a) For ~~taxes payable for~~ 
 17.26  ~~calendar year 2003~~ fiscal year 2004 and earlier, a district that 
 17.27  has filed a plan pursuant to section 121.917, subdivision 4, ~~may~~ 
 17.28  ~~levy~~ is eligible for state aid, with the approval of the 
 17.29  commissioner, to eliminate a deficit in the net unappropriated 
 17.30  balance in the operating funds of the district, determined as of 
 17.31  June 30, 1992, and certified and adjusted by the commissioner.  
 17.32  Each year ~~this levy may be an amount not to~~ the state aid shall 
 17.33  not exceed the lesser of: 
 17.34     (1) an amount raised by ~~a levy of a net tax rate of one~~ 
 17.35  ~~percent times the adjusted net tax capacity~~ the district's levy 
 17.36  for this purpose for taxes payable in 1997; or 
 18.1      (2) $100,000. 
 18.2   This amount shall be reduced by referendum revenue authorized 
 18.3   under section 124A.03 pursuant to the plan filed under section 
 18.4   121.917.  However, the total amount of this ~~levy~~ revenue for all 
 18.5   years it is ~~made~~ received shall not exceed the amount of the 
 18.6   deficit in the net unappropriated balance in the operating funds 
 18.7   of the district as of June 30, 1992.  When the cumulative ~~levies~~ 
 18.8   ~~made pursuant to~~ revenue received under this subdivision ~~equal~~ 
 18.9   equals the total amount permitted by this subdivision, the ~~levy~~ 
 18.10  state aid shall be discontinued.  
 18.11     (b) A district, if eligible, may ~~levy~~ receive revenue under 
 18.12  this subdivision or subdivision 2 or 3, or under section 
 18.13  122.531, subdivision 4a, or Laws 1992, chapter 499, article 7, 
 18.14  sections 16 or 17, but not under more than one. 
 18.15     (c) The proceeds of this ~~levy~~ revenue shall be used only 
 18.16  for cash flow requirements and shall not be used to supplement 
 18.17  district revenues or income for the purposes of increasing the 
 18.18  district's expenditures or budgets.  
 18.19     ~~(d) Any district that levies pursuant to this subdivision~~ 
 18.20  ~~shall certify the maximum levy allowable under section 124A.23,~~ 
 18.21  ~~subdivision 2, in that same year.~~ 
 18.22     Sec. 29.  Minnesota Statutes 1995 Supplement, section 
 18.23  124.916, subdivision 1, is amended to read: 
 18.24     Subdivision 1.  [HEALTH INSURANCE.] (a) A school 
 18.25  district ~~may levy~~ is eligible for state aid in the amount 
 18.26  necessary to make employer contributions for insurance for 
 18.27  retired employees under this subdivision.  ~~Notwithstanding~~ 
 18.28  ~~section 121.904, 50 percent of the amount levied shall be~~ 
 18.29  ~~recognized as revenue for the fiscal year in which the levy is~~ 
 18.30  ~~certified.  This levy shall not be considered in computing the~~ 
 18.31  ~~aid reduction under section 124.155.~~ 
 18.32     (b) The school board of a joint vocational technical 
 18.33  district formed under sections 136C.60 to 136C.69 and the school 
 18.34  board of a school district may provide employer-paid hospital, 
 18.35  medical, and dental benefits to a person who: 
 18.36     (1) is eligible for employer-paid insurance under 
 19.1   collective bargaining agreements or personnel plans in effect on 
 19.2   June 30, 1992; 
 19.3      (2) has at least 25 years of service credit in the public 
 19.4   pension plan of which the person is a member on the day before 
 19.5   retirement or, in the case of a teacher, has a total of at least 
 19.6   25 years of service credit in the teachers retirement 
 19.7   association, a first-class city teacher retirement fund, or any 
 19.8   combination of these; 
 19.9      (3) upon retirement is immediately eligible for a 
 19.10  retirement annuity; 
 19.11     (4) is at least 55 and not yet 65 years of age; and 
 19.12     (5) retires on or after May 15, 1992, and before July 21, 
 19.13  1992. 
 19.14     A school board paying insurance under this subdivision may 
 19.15  not exclude any eligible employees. 
 19.16     (c) An employee who is eligible both for the health 
 19.17  insurance benefit under this subdivision and for an early 
 19.18  retirement incentive under a collective bargaining agreement or 
 19.19  personnel plan established by the employer must select either 
 19.20  the early retirement incentive provided under the collective 
 19.21  bargaining agreement personnel plan or the incentive provided 
 19.22  under this subdivision, but may not receive both.  For purposes 
 19.23  of this subdivision, a person retires when the person terminates 
 19.24  active employment and applies for retirement benefits.  The 
 19.25  retired employee is eligible for single and dependent coverages 
 19.26  and employer payments to which the person was entitled 
 19.27  immediately before retirement, subject to any changes in 
 19.28  coverage and employer and employee payments through collective 
 19.29  bargaining or personnel plans, for employees in positions 
 19.30  equivalent to the position from which the employee retired.  The 
 19.31  retired employee is not eligible for employer-paid life 
 19.32  insurance.  Eligibility ceases when the retired employee attains 
 19.33  the age of 65, or when the employee chooses not to receive the 
 19.34  retirement benefits for which the employee has applied, or when 
 19.35  the employee is eligible for employer-paid health insurance from 
 19.36  a new employer.  Coverages must be coordinated with relevant 
 20.1   health insurance benefits provided through the federally 
 20.2   sponsored Medicare program.  
 20.3      (d) Unilateral implementation of this section by a public 
 20.4   employer is not an unfair labor practice for purposes of chapter 
 20.5   179A.  The authority provided in this subdivision for an 
 20.6   employer to pay health insurance costs for certain retired 
 20.7   employees is not subject to the limits in section 179A.20, 
 20.8   subdivision 2a. 
 20.9      (e) If a school district ~~levies~~ receives revenue according 
 20.10  to this subdivision, it may not also ~~levy~~ receive revenue 
 20.11  according to section 122.531, subdivision 9, for eligible 
 20.12  employees. 
 20.13     Sec. 30.  Minnesota Statutes 1995 Supplement, section 
 20.14  124.916, subdivision 2, is amended to read: 
 20.15     Subd. 2.  [RETIRED EMPLOYEE HEALTH BENEFITS.] For ~~taxes~~ 
 20.16  ~~payable in 1996,~~ fiscal years 1997, 1998, and 1999 only, a 
 20.17  school district ~~may levy~~ is eligible for state aid in an amount 
 20.18  up to the amount the district is required by the collective 
 20.19  bargaining agreement in effect on March 30, 1992, to pay for 
 20.20  health insurance or unreimbursed medical expenses for licensed 
 20.21  and nonlicensed employees who have terminated services in the 
 20.22  employing district and withdrawn from active teaching service or 
 20.23  other active service, as applicable, before July 1, 1992.  The 
 20.24  total amount of the ~~levy~~ state aid each year may not exceed 
 20.25  $300,000.  
 20.26     ~~Notwithstanding section 121.904, 50 percent of the proceeds~~ 
 20.27  ~~of this levy shall be recognized in the fiscal year in which it~~ 
 20.28  ~~is certified.~~ 
 20.29     Sec. 31.  Minnesota Statutes 1994, section 124.916, 
 20.30  subdivision 3, is amended to read: 
 20.31     Subd. 3.  [RETIREMENT ~~LEVIES~~ AID.] (1) ~~In addition to the~~ 
 20.32  ~~excess levy authorized in 1976 any district within a city of the~~ 
 20.33  ~~first class which was authorized in 1975 to make a retirement~~ 
 20.34  ~~levy under Minnesota Statutes 1974, section 275.127 and chapter~~ 
 20.35  ~~422A may levy an amount per pupil unit which is equal to the~~ 
 20.36  ~~amount levied in 1975 payable 1976, under Minnesota Statutes~~ 
 21.1   ~~1974, section 275.127 and chapter 422A, divided by the number of~~ 
 21.2   ~~pupil units in the district in 1976-1977.~~ 
 21.3      ~~(2) In 1979 and each year thereafter, any district which~~ 
 21.4   ~~qualified in 1976 for an extra levy under clause (1) shall be~~ 
 21.5   ~~allowed to levy the same amount as levied for retirement in 1978~~ 
 21.6   ~~under this clause reduced each year by ten percent of the~~ 
 21.7   ~~difference between the amount levied for retirement in 1971~~ 
 21.8   ~~under Minnesota Statutes 1971, sections 275.127 and 422.01 to~~ 
 21.9   ~~422.54 and the amount levied for retirement in 1975 under~~ 
 21.10  ~~Minnesota Statutes 1974, section 275.127 and chapter 422A.~~ 
 21.11     ~~(3) In 1991 and each year thereafter, a district to which~~ 
 21.12  ~~this subdivision applies may levy an additional amount required~~ 
 21.13  ~~for contributions to the Minneapolis employees retirement fund~~ 
 21.14  ~~as a result of the maximum dollar amount limitation on state~~ 
 21.15  ~~contributions to the fund imposed under section 422A.101,~~ 
 21.16  ~~subdivision 3.  The additional levy shall not exceed the most~~ 
 21.17  ~~recent amount certified by the board of the Minneapolis~~ 
 21.18  ~~employees retirement fund as the district's share of the~~ 
 21.19  ~~contribution requirement in excess of the maximum state~~ 
 21.20  ~~contribution under section 422A.101, subdivision 3.~~  
 21.21     ~~(4) For taxes payable in 1994 and thereafter, special~~ 
 21.22  ~~school district No. 1, Minneapolis, and independent school~~ 
 21.23  ~~district No. 625, St. Paul, may levy for the increase in the~~ 
 21.24  ~~employer retirement fund contributions, under Laws 1992, chapter~~ 
 21.25  ~~598, article 5, section 1.  Notwithstanding section 121.904, the~~ 
 21.26  ~~entire amount of this levy may be recognized as revenue for the~~ 
 21.27  ~~fiscal year in which the levy is certified.  This levy shall not~~ 
 21.28  ~~be considered in computing the aid reduction under section~~ 
 21.29  ~~124.155.~~  For fiscal years 1998 and later, the commissioner 
 21.30  shall determine the amount of retirement levies certified under 
 21.31  this subdivision by each district for taxes payable in 1997. 
 21.32     (2) A district is eligible for state aid equal to the 
 21.33  amount calculated under paragraph (1). 
 21.34     ~~(5)~~ (3) If the employer retirement fund contributions under 
 21.35  section 354A.12, subdivision 2a, are increased for fiscal year 
 21.36  1994 or later fiscal years, special school district No. 1, 
 22.1   Minneapolis, and independent school district No. 625, St. Paul, 
 22.2   ~~may levy in payable 1994 or later an amount~~ are eligible for 
 22.3   state aid equal to the amount derived by applying the net 
 22.4   increase in the employer retirement fund contribution rate of 
 22.5   the respective teacher retirement fund association between 
 22.6   fiscal year 1993 and the fiscal year beginning in the year after 
 22.7   the levy is certified to the total covered payroll of the 
 22.8   applicable teacher retirement fund association.  ~~Notwithstanding~~ 
 22.9   ~~section 121.904, the entire amount of this levy may be~~ 
 22.10  ~~recognized as revenue for the fiscal year in which the levy is~~ 
 22.11  ~~certified.  This levy shall not be considered in computing the~~ 
 22.12  ~~aid reduction under section 124.155.  If an applicable school~~ 
 22.13  ~~district levies under this paragraph, they may not levy under~~ 
 22.14  ~~paragraph (4).~~ 
 22.15     ~~(6)~~ (4) In addition to the ~~levy~~ state aid authorized under 
 22.16  paragraph ~~(5)~~ (3), special school district No. 1, 
 22.17  Minneapolis, ~~may also levy in payable 1994 or later~~ is also 
 22.18  eligible for additional state aid in an amount equal to the 
 22.19  state aid contribution under section 354A.12, subdivision 3b.  
 22.20  ~~Notwithstanding section 121.904, the entire amount of this levy~~ 
 22.21  ~~may be recognized as revenue for the fiscal year in which the~~ 
 22.22  ~~levy is certified.  This levy shall not be considered in~~ 
 22.23  ~~computing the aid reduction under section 124.155.~~ 
 22.24     Sec. 32.  Minnesota Statutes 1994, section 124.916, 
 22.25  subdivision 4, is amended to read: 
 22.26     Subd. 4.  [MINNEAPOLIS HEALTH INSURANCE SUBSIDY.] Each year 
 22.27  special school district No. 1, Minneapolis, ~~may make an~~ 
 22.28  ~~additional levy not to exceed~~ is eligible for state aid equal to 
 22.29  the amount raised by a net tax rate of .10 percent times the 
 22.30  adjusted net tax capacity ~~for taxes payable in 1991 and~~ 
 22.31  ~~thereafter~~ of the property in the district for the preceding 
 22.32  year.  The proceeds may be used only to subsidize health 
 22.33  insurance costs for eligible teachers as provided in this 
 22.34  section.  
 22.35     "Eligible teacher" means a retired teacher who was a basic 
 22.36  member of the Minneapolis teachers retirement fund association, 
 23.1   who retired before May 1, 1974, and who is not eligible to 
 23.2   receive the hospital insurance benefits of the federal Medicare 
 23.3   program of the Social Security Act without payment of a monthly 
 23.4   premium.  The district shall notify eligible teachers that a 
 23.5   subsidy is available.  To obtain a subsidy, an eligible teacher 
 23.6   must submit to the school district a copy of receipts for health 
 23.7   insurance premiums paid.  The school district shall disburse the 
 23.8   health insurance premium subsidy to each eligible teacher 
 23.9   according to a schedule determined by the district, but at least 
 23.10  annually.  An eligible teacher may receive a subsidy up to an 
 23.11  amount equal to the lesser of 90 percent of the cost of the 
 23.12  eligible teacher's health insurance or up to 90 percent of the 
 23.13  cost of the number two qualified plan of health coverage for 
 23.14  individual policies made available by the Minnesota 
 23.15  comprehensive health association under chapter 62E.  
 23.16     If funds remaining from the previous year's health 
 23.17  insurance subsidy ~~levy~~ revenue, minus the previous year's 
 23.18  required subsidy amount, are sufficient to pay the estimated 
 23.19  current year subsidy, the ~~levy~~ state aid must be discontinued 
 23.20  until the remaining funds are estimated by the school board to 
 23.21  be insufficient to pay the subsidy. 
 23.22     Sec. 33.  Minnesota Statutes 1994, section 124.918, 
 23.23  subdivision 8, is amended to read: 
 23.24     Subd. 8.  [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 
 23.25  Reductions in levies pursuant to section 124.918, subdivision 1, 
 23.26  and section 273.138, shall be made prior to the reductions in 
 23.27  clause (2). 
 23.28     (2) Notwithstanding any other law to the contrary, 
 23.29  districts which received payments pursuant to sections 298.018; 
 23.30  298.23 to 298.28, except an amount distributed under section 
 23.31  298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 
 23.32  298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 
 23.33  upon severed mineral values, or recognized revenue pursuant to 
 23.34  section 477A.15; shall not include a portion of these aids in 
 23.35  their permissible levies pursuant to those sections, but instead 
 23.36  shall reduce the permissible levies authorized by this chapter 
 24.1   and chapter 124A by the greater of the following: 
 24.2      (a) an amount equal to 50 percent of the total dollar 
 24.3   amount of the payments received pursuant to those sections or 
 24.4   revenue recognized pursuant to section 477A.15 in the previous 
 24.5   fiscal year; or 
 24.6      (b) an amount equal to the total dollar amount of the 
 24.7   payments received pursuant to those sections or revenue 
 24.8   recognized pursuant to section 477A.15 in the previous fiscal 
 24.9   year less the product of the same dollar amount of payments or 
 24.10  revenue times the ratio of the maximum levy allowed the district 
 24.11  under Minnesota Statutes 1986, sections 124A.03, subdivision 2, 
 24.12  124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 
 24.13  subdivision 3a, 124A.12, subdivision 3a, and 124A.14, 
 24.14  subdivision 5a, to the total levy allowed the district under 
 24.15  this section and Minnesota Statutes 1986, sections 124A.03, 
 24.16  124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 
 24.17  subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision 
 24.18  5a, and 124A.20, subdivision 2, for levies certified in 1986. 
 24.19     (3) No reduction pursuant to this subdivision shall reduce 
 24.20  the levy made by the district pursuant to section ~~124A.23~~ 
 24.21  124A.25, to an amount less than the amount raised by a levy of a 
 24.22  net tax rate of 6.82 percent times the adjusted net tax capacity 
 24.23  for taxes payable in 1990 and thereafter of that district for 
 24.24  the preceding year as determined by the commissioner.  The 
 24.25  amount of any increased levy authorized by referendum pursuant 
 24.26  to section 124A.03, subdivision 2, shall not be reduced pursuant 
 24.27  to this subdivision.  The amount of any levy authorized by 
 24.28  section 124.912, subdivision 1, to make payments for bonds 
 24.29  issued and for interest thereon, shall not be reduced pursuant 
 24.30  to this subdivision.  
 24.31     (4) Before computing the reduction pursuant to this 
 24.32  subdivision of the capital expenditure facilities levy 
 24.33  authorized by section 124.243, the capital expenditure equipment 
 24.34  levy authorized by section 124.244, the health and safety levy 
 24.35  authorized by sections 124.83 and 124.91, subdivision 6, the 
 24.36  commissioner shall ascertain from each affected school district 
 25.1   the amount it proposes to levy under each section or 
 25.2   subdivision.  The reduction shall be computed on the basis of 
 25.3   the amount so ascertained. 
 25.4      (5) Notwithstanding any law to the contrary, any amounts 
 25.5   received by districts in any fiscal year pursuant to sections 
 25.6   298.018; 298.23 to 298.28; 298.34 to 298.39; 298.391 to 298.396; 
 25.7   298.405; or any law imposing a tax on severed mineral values; 
 25.8   and not deducted from general education aid pursuant to section 
 25.9   124A.035, subdivision 5, clause (2), and not applied to reduce 
 25.10  levies pursuant to this subdivision shall be paid by the 
 25.11  district to the St. Louis county auditor in the following amount 
 25.12  by March 15 of each year, the amount required to be subtracted 
 25.13  from the previous fiscal year's general education aid pursuant 
 25.14  to section 124A.035, subdivision 5, which is in excess of the 
 25.15  general education aid earned for that fiscal year.  The county 
 25.16  auditor shall deposit any amounts received pursuant to this 
 25.17  clause in the St. Louis county treasury for purposes of paying 
 25.18  the taconite homestead credit as provided in section 273.135. 
 25.19     Sec. 34.  Minnesota Statutes 1994, section 124A.03, is 
 25.20  amended by adding a subdivision to read: 
 25.21     Subd. 7.  [REFERENDUM ALLOWANCE.] A district's referendum 
 25.22  allowance for fiscal years 1999 and later equals its referendum 
 25.23  revenue for fiscal year 1998 divided by its actual pupil units 
 25.24  for that year.  The district's referendum allowance computed 
 25.25  under this subdivision expires according to its scheduled 
 25.26  expiration under Minnesota Statutes 1994, sections 124A.03 and 
 25.27  124A.0311. 
 25.28     Sec. 35.  Minnesota Statutes 1994, section 124A.03, is 
 25.29  amended by adding a subdivision to read: 
 25.30     Subd. 8.  [REFERENDUM REVENUE.] A district's referendum 
 25.31  revenue for fiscal years 1998 and later equals:  (1) its 
 25.32  referendum allowance determined according to subdivision 7, less 
 25.33  the difference between the basic general education formula 
 25.34  allowance for that year and $3,505; times (2) its actual pupil 
 25.35  units for that year.  
 25.36     Sec. 36.  Minnesota Statutes 1995 Supplement, section 
 26.1   124A.22, subdivision 1, is amended to read: 
 26.2      Subdivision 1.  [GENERAL EDUCATION REVENUE.] ~~(a) For fiscal~~ 
 26.3   ~~year 1996, the general education revenue for each district~~ 
 26.4   ~~equals the sum of the district's basic revenue, compensatory~~ 
 26.5   ~~education revenue, training and experience revenue, secondary~~ 
 26.6   ~~sparsity revenue, elementary sparsity revenue, and supplemental~~ 
 26.7   ~~revenue.~~ 
 26.8      ~~(b)~~ For fiscal year 1997 and thereafter, the general 
 26.9   education revenue for each district equals the sum of the 
 26.10  district's basic revenue, compensatory education revenue, 
 26.11  secondary sparsity revenue, elementary sparsity revenue, 
 26.12  transportation sparsity, total operating capital revenue, 
 26.13  transition revenue, and supplemental revenue.  General education 
 26.14  revenue is provided through state aid. 
 26.15     Sec. 37.  [124A.25] [STATEWIDE UNIFORM SCHOOL LEVY.] 
 26.16     Subdivision 1.  [STATEWIDE UNIFORM SCHOOL TAX RATE.] The 
 26.17  commissioner shall establish the statewide uniform school tax 
 26.18  rate by August 1 of each year for levies payable in the 
 26.19  following year.  The statewide uniform school tax rate shall be 
 26.20  a rate, that, when applied to the adjusted net tax capacity for 
 26.21  all districts, raises the amount specified in this subdivision.  
 26.22  The statewide uniform school tax rate shall be the rate that 
 26.23  raises $642,200,000 for fiscal year 1998 and later fiscal 
 26.24  years.  The statewide uniform school tax rate may not be changed 
 26.25  due to changes or corrections made to a district's adjusted net 
 26.26  tax capacity after the tax rate has been established. 
 26.27     Subd. 2.  [STATEWIDE UNIFORM SCHOOL LEVY.] By August 1 of 
 26.28  each year, the commissioner shall certify to the home county 
 26.29  auditor of each school district the statewide uniform school 
 26.30  levy within the district equal to the tax rate established 
 26.31  according to subdivision 1 multiplied by the adjusted net tax 
 26.32  capacity of the district for the preceding year. 
 26.33     Sec. 38.  Minnesota Statutes 1994, section 124A.292, 
 26.34  subdivision 2, is amended to read: 
 26.35     Subd. 2.  [REVENUE.] Staff development incentive revenue is 
 26.36  equal to the number of teachers at the site times $25.  Staff 
 27.1   development incentive revenue is provided through state aid. 
 27.2      Sec. 39.  Minnesota Statutes 1994, section 273.1398, 
 27.3   subdivision 3, is amended to read: 
 27.4      Subd. 3.  [DISPARITY REDUCTION AID.] For taxes payable in 
 27.5   1995, and subsequent years, the amount of disparity aid 
 27.6   certified for each taxing district within each unique taxing 
 27.7   jurisdiction for taxes payable in the prior year shall be 
 27.8   multiplied by the ratio of (1) the jurisdiction's tax capacity 
 27.9   using the class rates for taxes payable in the year for which 
 27.10  aid is being computed, to (2) its tax capacity using the class 
 27.11  rates for taxes payable in the year prior to that for which aid 
 27.12  is being computed, both based upon market values for taxes 
 27.13  payable in the year prior to that for which aid is being 
 27.14  computed.  For the purposes of this aid determination, disparity 
 27.15  reduction aid certified for taxes payable in the prior year for 
 27.16  a taxing entity other than a town ~~or school district~~ is deemed 
 27.17  to be county government disparity reduction aid.  For taxes 
 27.18  payable in 1992 and subsequent years, the amount of disparity 
 27.19  aid certified to each taxing jurisdiction shall be reduced by 
 27.20  any reductions required in the current year or permanent 
 27.21  reductions required in previous years under section 477A.0132. 
 27.22     Sec. 40.  Minnesota Statutes 1995 Supplement, section 
 27.23  275.065, subdivision 3, is amended to read: 
 27.24     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 27.25  county auditor shall prepare and the county treasurer shall 
 27.26  deliver after November 10 and on or before November 24 each 
 27.27  year, by first class mail to each taxpayer at the address listed 
 27.28  on the county's current year's assessment roll, a notice of 
 27.29  proposed property taxes and, in the case of a town, final 
 27.30  property taxes.  
 27.31     (b) The commissioner of revenue shall prescribe the form of 
 27.32  the notice. 
 27.33     (c) The notice must inform taxpayers that it contains the 
 27.34  amount of property taxes each taxing authority ~~other than a~~ 
 27.35  ~~town~~, including the state of Minnesota, proposes to collect for 
 27.36  taxes payable the following year ~~and, for a town, the amount of~~ 
 28.1   ~~its final levy~~.  In the case of the state of Minnesota or any 
 28.2   town, the amount shown shall be based upon the final rather than 
 28.3   a proposed levy.  It must clearly state that each taxing 
 28.4   authority, including regional library districts established 
 28.5   under section 134.201, and including the metropolitan taxing 
 28.6   districts as defined in paragraph (i), but excluding the state 
 28.7   of Minnesota, all other special taxing districts, and towns, 
 28.8   will hold a public meeting to receive public testimony on the 
 28.9   proposed budget and proposed or final property tax levy, or, in 
 28.10  case of a school district, on the current budget and proposed 
 28.11  property tax levy.  It must clearly state the time and place of 
 28.12  each taxing authority's meeting and an address where comments 
 28.13  will be received by mail.  
 28.14     (d) The notice must state for each parcel: 
 28.15     (1) the market value of the property as determined under 
 28.16  section 273.11, and used for computing property taxes payable in 
 28.17  the following year and for taxes payable in the current year; 
 28.18  and, in the case of residential property, whether the property 
 28.19  is classified as homestead or nonhomestead.  The notice must 
 28.20  clearly inform taxpayers of the years to which the market values 
 28.21  apply and that the values are final values; 
 28.22     (2) ~~by~~ the proposed net tax on the property for taxes 
 28.23  payable the following year and the actual tax for taxes payable 
 28.24  the current year, itemized for the state of Minnesota, county, 
 28.25  city or town, school district excess referenda ~~levy~~ tax, 
 28.26  remaining school district ~~levy~~ tax, regional library district, 
 28.27  if in existence, the total of the metropolitan special taxing 
 28.28  districts as defined in paragraph (i) and the sum of the 
 28.29  remaining special taxing districts, and as a total of the taxing 
 28.30  authorities, including all special taxing districts~~, the~~ 
 28.31  ~~proposed or, for a town, final net tax on the property for taxes~~ 
 28.32  ~~payable the following year and the actual tax for taxes payable~~ 
 28.33  ~~the current year~~.  For the purposes of this subdivision, "school 
 28.34  district excess referenda ~~levy~~ tax" means school district taxes 
 28.35  for operating purposes approved at referendums, including those 
 28.36  taxes based on net tax capacity as well as those based on market 
 29.1   value.  "School district excess referenda ~~levy~~ tax" does not 
 29.2   include school district taxes for capital expenditures approved 
 29.3   at referendums or school district taxes to pay for the debt 
 29.4   service on bonds approved at referenda.  In the case of the city 
 29.5   of Minneapolis, the ~~levy~~ tax for the Minneapolis library board 
 29.6   and the ~~levy~~ tax for Minneapolis park and recreation shall be 
 29.7   listed separately from the remaining amount of the city's ~~levy~~ 
 29.8   tax.  In the case of a parcel where tax increment or the fiscal 
 29.9   disparities areawide tax applies, the proposed tax ~~levy~~ on the 
 29.10  captured value or the proposed tax ~~levy~~ on the tax capacity 
 29.11  subject to the areawide tax must each be stated separately and 
 29.12  not included in the sum of the special taxing districts; and 
 29.13     (3) the increase or decrease in the amounts in clause (2) 
 29.14  from taxes payable in the current year to proposed or, for a 
 29.15  town, final taxes payable the following year, expressed as a 
 29.16  dollar amount and as a percentage. 
 29.17     (e) The notice must clearly state that the proposed or 
 29.18  final taxes do not include the following: 
 29.19     (1) special assessments; 
 29.20     (2) levies approved by the voters after the date the 
 29.21  proposed taxes are certified, including bond referenda, school 
 29.22  district levy referenda, and levy limit increase referenda; 
 29.23     (3) amounts necessary to pay cleanup or other costs due to 
 29.24  a natural disaster occurring after the date the proposed taxes 
 29.25  are certified; 
 29.26     (4) amounts necessary to pay tort judgments against the 
 29.27  taxing authority that become final after the date the proposed 
 29.28  taxes are certified; and 
 29.29     (5) the contamination tax imposed on properties which 
 29.30  received market value reductions for contamination. 
 29.31     (f) Except as provided in subdivision 7, failure of the 
 29.32  county auditor to prepare or the county treasurer to deliver the 
 29.33  notice as required in this section does not invalidate the 
 29.34  proposed or final tax levy or the taxes payable pursuant to the 
 29.35  tax levy. 
 29.36     (g) If the notice the taxpayer receives under this section 
 30.1   lists the property as nonhomestead and the homeowner provides 
 30.2   satisfactory documentation to the county assessor that the 
 30.3   property is owned and has been used as the owner's homestead 
 30.4   prior to June 1 of that year, the assessor shall reclassify the 
 30.5   property to homestead for taxes payable in the following year. 
 30.6      (h) In the case of class 4 residential property used as a 
 30.7   residence for lease or rental periods of 30 days or more, the 
 30.8   taxpayer must either: 
 30.9      (1) mail or deliver a copy of the notice of proposed 
 30.10  property taxes to each tenant, renter, or lessee; or 
 30.11     (2) post a copy of the notice in a conspicuous place on the 
 30.12  premises of the property.  
 30.13     The notice must be mailed or posted by the taxpayer by 
 30.14  November 27 or within three days of receipt of the notice, 
 30.15  whichever is later.  A taxpayer may notify the county treasurer 
 30.16  of the address of the taxpayer, agent, caretaker, or manager of 
 30.17  the premises to which the notice must be mailed in order to 
 30.18  fulfill the requirements of this paragraph. 
 30.19     (i) For purposes of this subdivision, subdivisions 5a and 
 30.20  6, "metropolitan special taxing districts" means the following 
 30.21  taxing districts in the seven-county metropolitan area that levy 
 30.22  a property tax for any of the specified purposes listed below: 
 30.23     (1) metropolitan council under section 473.132, 473.167, 
 30.24  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 30.25     (2) metropolitan airports commission under section 473.667, 
 30.26  473.671, or 473.672; and 
 30.27     (3) metropolitan mosquito control commission under section 
 30.28  473.711. 
 30.29     For purposes of this section, any levies made by the 
 30.30  regional rail authorities in the county of Anoka, Carver, 
 30.31  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 30.32  398A shall be included with the appropriate county's levy and 
 30.33  shall be discussed at that county's public hearing. 
 30.34     Sec. 41.  Minnesota Statutes 1995 Supplement, section 
 30.35  275.08, subdivision 1b, is amended to read: 
 30.36     Subd. 1b.  The amounts certified under section 275.07 by an 
 31.1   individual local government unit, except for any amounts 
 31.2   certified under sections 124A.03, subdivision 2a, and 275.61, 
 31.3   shall be divided by the total net tax capacity of all taxable 
 31.4   properties within the local government unit's taxing 
 31.5   jurisdiction.  The resulting ratio, the local government's local 
 31.6   tax rate, multiplied by each property's net tax capacity shall 
 31.7   be each property's tax for that local government unit before 
 31.8   reduction by any credits.  
 31.9      The state school tax levied within each school district 
 31.10  under section 124A.25, subdivision 2, shall be divided by the 
 31.11  total net tax capacity of all taxable properties within the 
 31.12  school district's taxing jurisdiction.  The resulting ratio, the 
 31.13  district's state school tax rate, multiplied by each property's 
 31.14  net tax capacity shall be each property's statewide uniform 
 31.15  school tax before reduction by any credits. 
 31.16     Any amount certified to the county auditor under section 
 31.17  124A.03, subdivision 2a, or 275.61, after the dates given in 
 31.18  those sections, shall be divided by the total estimated market 
 31.19  value of all taxable properties within the taxing district.  The 
 31.20  resulting ratio, the taxing district's new referendum tax rate, 
 31.21  multiplied by each property's estimated market value shall be 
 31.22  each property's new referendum tax before reduction by any 
 31.23  credits. 
 31.24     Sec. 42.  Minnesota Statutes 1995 Supplement, section 
 31.25  276.04, subdivision 2, is amended to read: 
 31.26     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
 31.27  shall provide for the printing of the tax statements.  The 
 31.28  commissioner of revenue shall prescribe the form of the property 
 31.29  tax statement and its contents.  The statement must contain a 
 31.30  tabulated statement of the dollar amount due to each taxing 
 31.31  authority from the parcel of real property for which a 
 31.32  particular tax statement is prepared.  The dollar amounts due 
 31.33  the state of Minnesota, county, township or municipality, the 
 31.34  total of the metropolitan special taxing districts as defined in 
 31.35  section 275.065, subdivision 3, paragraph (i), school district 
 31.36  excess referenda ~~levy~~ tax, remaining school district ~~levy~~ tax, 
 32.1   and the total of other voter approved referenda ~~levies~~ taxes 
 32.2   based on market value under section 275.61 must be separately 
 32.3   stated.  The amount due to the state of Minnesota through the 
 32.4   uniform school levy under section 124A.25 shall be designated as 
 32.5   the "statewide uniform school tax."  The amounts due all other 
 32.6   special taxing districts, if any, may be aggregated.  For the 
 32.7   purposes of this subdivision, "school district excess 
 32.8   referenda ~~levy~~ tax" means school district taxes for operating 
 32.9   purposes approved at referenda, including those taxes based on 
 32.10  net tax capacity as well as those based on market value.  
 32.11  "School district excess referenda ~~levy~~ tax" does not include 
 32.12  school district taxes for capital expenditures approved at 
 32.13  referendums or school district taxes to pay for the debt service 
 32.14  on bonds approved at referenda.  The amount of the tax on 
 32.15  contamination value imposed under sections 270.91 to 270.98, if 
 32.16  any, must also be separately stated.  The dollar amounts, 
 32.17  including the dollar amount of any special assessments, may be 
 32.18  rounded to the nearest even whole dollar.  For purposes of this 
 32.19  section whole odd-numbered dollars may be adjusted to the next 
 32.20  higher even-numbered dollar.  The amount of market value 
 32.21  excluded under section 273.11, subdivision 16, if any, must also 
 32.22  be listed on the tax statement.  ~~The statement shall include the~~ 
 32.23  ~~following sentence, printed in upper case letters in boldface~~ 
 32.24  ~~print:  "THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY~~ 
 32.25  ~~TAX REVENUES.  THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX~~ 
 32.26  ~~BY PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF~~ 
 32.27  ~~GOVERNMENT."~~  
 32.28     (b) The property tax statements for manufactured homes and 
 32.29  sectional structures taxed as personal property shall contain 
 32.30  the same information that is required on the tax statements for 
 32.31  real property.  
 32.32     (c) Real and personal property tax statements must contain 
 32.33  the following information in the order given in this paragraph.  
 32.34  The information must contain the current year tax information in 
 32.35  the right column with the corresponding information for the 
 32.36  previous year in a column on the left: 
 33.1      (1) the property's estimated market value under section 
 33.2   273.11, subdivision 1; 
 33.3      (2) the property's taxable market value after reductions 
 33.4   under section 273.11, subdivisions 1a and 16; 
 33.5      (3) the property's gross tax, calculated by multiplying the 
 33.6   property's gross tax capacity times the total local tax rate and 
 33.7   adding to the result the sum of the aids enumerated in clause 
 33.8   (3); 
 33.9      (4) a total of the following aids: 
 33.10     (i) education aids payable under chapters 124 and 124A; 
 33.11     (ii) local government aids for cities, towns, and counties 
 33.12  under chapter 477A; and 
 33.13     (iii) disparity reduction aid under section 273.1398; 
 33.14     (5) for homestead residential and agricultural properties, 
 33.15  the homestead and agricultural credit aid apportioned to the 
 33.16  property.  This amount is obtained by multiplying the total 
 33.17  local tax rate by the difference between the property's gross 
 33.18  and net tax capacities under section 273.13.  This amount must 
 33.19  be separately stated and identified as "homestead and 
 33.20  agricultural credit."  For purposes of comparison with the 
 33.21  previous year's amount for the statement for taxes payable in 
 33.22  1990, the statement must show the homestead credit for taxes 
 33.23  payable in 1989 under section 273.13, and the agricultural 
 33.24  credit under section 273.132 for taxes payable in 1989; 
 33.25     (6) any credits received under sections 273.119; 273.123; 
 33.26  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
 33.27  473H.10, except that the amount of credit received under section 
 33.28  273.135 must be separately stated and identified as "taconite 
 33.29  tax relief"; and 
 33.30     (7) the net tax payable in the manner required in paragraph 
 33.31  (a).  
 33.32     The commissioner of revenue shall certify to the county 
 33.33  auditor the actual or estimated aids enumerated in clauses (3) 
 33.34  and (4) that local governments will receive in the following 
 33.35  year.  In the case of a county containing a city of the first 
 33.36  class, for taxes levied in 1991, and for all counties for taxes 
 34.1   levied in 1992 and thereafter, the commissioner must certify 
 34.2   this amount by September 1.  
 34.3      Sec. 43.  Minnesota Statutes 1994, section 473F.02, 
 34.4   subdivision 5, is amended to read: 
 34.5      Subd. 5.  [GOVERNMENTAL UNIT.] "Governmental unit" means ~~a~~ 
 34.6   the state of Minnesota, or any county, city, town, school 
 34.7   district, or other taxing unit or body which levies ad valorem 
 34.8   taxes in whole or in part within the area. 
 34.9      Sec. 44.  Minnesota Statutes 1994, section 473F.08, 
 34.10  subdivision 3, is amended to read: 
 34.11     Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
 34.12  apportion the levy of each governmental unit in the auditor's 
 34.13  county in the manner prescribed by this subdivision.  The 
 34.14  auditor shall: 
 34.15     (a) by August 20, determine the areawide portion of the 
 34.16  levy for each governmental unit by multiplying the local tax 
 34.17  rate of the governmental unit for the preceding levy year times 
 34.18  the distribution value set forth in subdivision 2, clause (b); 
 34.19  and 
 34.20     (b) by September 5, determine the local portion of the 
 34.21  current year's levy by subtracting the resulting amount from 
 34.22  clause (a) from the governmental unit's current year's levy. 
 34.23     For property taxes payable in 1998 only, a percentage of 
 34.24  the areawide portion of a school district's levy shall be 
 34.25  distributed to the state of Minnesota uniform school levy within 
 34.26  the district equal to the percentage that equalized levies are 
 34.27  of the school district's payable 1997 levy.  The commissioner of 
 34.28  children, families, and learning shall certify the equalized 
 34.29  levy percentage of each district's payable 1997 levy to the 
 34.30  administrative auditor by July 1, 1997, using the definition of 
 34.31  equalized levies found in section 273.1398, subdivision 1. 
 34.32     Sec. 45.  [REPEALER.] 
 34.33     Subdivision 1.  [JULY 1, 1997.] (a) Minnesota Statutes 
 34.34  1994, sections 122.531, subdivision 4a; 124.2713, subdivisions 
 34.35  6a, 6b, and 7; 124.2715, subdivision 2; 124.2716, subdivisions 3 
 34.36  and 4; 124.2725, subdivision 7; 124.2727, subdivisions 6b and 
 35.1   6c; 124A.029; 124A.03, subdivisions 1b, 1d, 1e, 1f, 2b, and 3b; 
 35.2   124A.23, subdivisions 2, 3, and 5; and 124A.292, subdivisions 3 
 35.3   and 4; and Minnesota Statutes 1995 Supplement, sections 
 35.4   124.2715, subdivision 3; and 124.2727, subdivision 9, are 
 35.5   repealed July 1, 1997. 
 35.6      (b) Minnesota Statutes 1994, section 273.1398, subdivision 
 35.7   2, is repealed December 31, 1997, for aids payable in 1998 and 
 35.8   subsequent years. 
 35.9      (c) Minnesota Statutes 1994, sections 124.2711, subdivision 
 35.10  3; and 124.321, subdivisions 3, 4, and 5; and Minnesota Statutes 
 35.11  1995 Supplement, sections 124.2711, subdivision 2a; 124.2713, 
 35.12  subdivision 6; 124.2725, subdivisions 3, 4, and 15; 124.312, 
 35.13  subdivision 4; 124.314, subdivision 2; 124.321, subdivisions 1 
 35.14  and 2; 124A.03, subdivisions 1c and 2; 124A.22, subdivisions 13d 
 35.15  and 13e; 124A.23, subdivisions 1 and 4; and 124A.24, are 
 35.16  repealed July 1, 1997. 
 35.17     Subd. 2.  [TAXES PAYABLE IN 1997.] Minnesota Statutes 1994, 
 35.18  section 124.912, subdivision 2, is repealed July 1, 1997, and 
 35.19  shall not be levied for taxes payable in 1998 and following 
 35.20  years. 
 35.21     Sec. 46.  [EFFECTIVE DATE.] 
 35.22     (a) The provisions of this article take effect as provided 
 35.23  in paragraph (b) only if the constitutional amendment proposed 
 35.24  to the people by article 1, section 1, is adopted in the 1996 
 35.25  general election. 
 35.26     (b) Sections 1 to 38 are effective July 1, 1997, for 
 35.27  revenue for 1998-1999 and later school years.  Section 39 is 
 35.28  effective for aids payable in 1998 and subsequent years.  
 35.29  Sections 40 to 44 are effective for taxes payable in 1998 and 
 35.30  subsequent years. 
 35.31                             ARTICLE 3 
 35.32                 PROPERTY TAX CLASSIFICATION REFORM
 35.33     Section 1.  Minnesota Statutes 1995 Supplement, section 
 35.34  273.13, subdivision 24, is amended to read: 
 35.35     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 35.36  property and utility real and personal property, except class 5 
 36.1   property as identified in subdivision 31, clause (1), is class 
 36.2   3a.  ~~It~~ Commercial property and utility real and personal 
 36.3   property has a class rate of three percent of the first $100,000 
 36.4   of market value ~~for taxes payable in 1993 and thereafter,~~ and 
 36.5   5.06 percent of the market value over $100,000.  Industrial 
 36.6   property, defined as property used in manufacturing, milling, 
 36.7   converting, producing, processing, or fabricating materials, has 
 36.8   a class rate of three percent of the first $100,000 of market 
 36.9   value and four percent of the market value over $100,000.  In 
 36.10  the case of property which is used partially for commercial and 
 36.11  partially for industrial purposes, each portion of the 
 36.12  property's market value will be separately assigned a class rate 
 36.13  consistent with its use, provided that not more than $100,000 of 
 36.14  the property's market value may receive the preferential three 
 36.15  percent rate. 
 36.16     In the case of state-assessed commercial, industrial, and 
 36.17  utility property owned by one person or entity, only one parcel 
 36.18  has a reduced class rate on the first $100,000 of market value.  
 36.19  In the case of other commercial, industrial, and utility 
 36.20  property owned by one person or entity, only one parcel in each 
 36.21  county has a reduced class rate on the first $100,000 of market 
 36.22  value, except that: 
 36.23     (1) if the market value of the parcel is less than 
 36.24  $100,000, and additional parcels are owned by the same person or 
 36.25  entity in the same city or town within that county, the reduced 
 36.26  class rate shall be applied up to a combined total market value 
 36.27  of $100,000 for all parcels owned by the same person or entity 
 36.28  in the same city or town within the county; 
 36.29     (2) in the case of grain, fertilizer, and feed elevator 
 36.30  facilities, as defined in section 18C.305, subdivision 1, or 
 36.31  232.21, subdivision 8, the limitation to one parcel per owner 
 36.32  per county for the reduced class rate shall not apply, but there 
 36.33  shall be a limit of $100,000 of preferential value per site of 
 36.34  contiguous parcels owned by the same person or entity.  Only the 
 36.35  value of the elevator portion of each parcel shall qualify for 
 36.36  treatment under this clause.  For purposes of this subdivision, 
 37.1   contiguous parcels include parcels separated only by a railroad 
 37.2   or public road right-of-way; and 
 37.3      (3) in the case of property owned by a nonprofit charitable 
 37.4   organization that qualifies for tax exemption under section 
 37.5   501(c)(3) of the Internal Revenue Code of 1986, as amended 
 37.6   through December 31, 1993, if the property is used as a business 
 37.7   incubator, the limitation to one parcel per owner per county for 
 37.8   the reduced class rate shall not apply, provided that the 
 37.9   reduced rate applies only to the first $100,000 of value per 
 37.10  parcel owned by the organization.  As used in this clause, a 
 37.11  "business incubator" is a facility used for the development of 
 37.12  nonretail businesses, offering access to equipment, space, 
 37.13  services, and advice to the tenant businesses, for the purpose 
 37.14  of encouraging economic development, diversification, and job 
 37.15  creation in the area served by the organization. 
 37.16     To receive the reduced class rate on additional parcels 
 37.17  under clause (1), (2), or (3), the taxpayer must notify the 
 37.18  county assessor that the taxpayer owns more than one parcel that 
 37.19  qualifies under clause (1), (2), or (3). 
 37.20     (b) Employment property defined in section 469.166, during 
 37.21  the period provided in section 469.170, shall constitute class 
 37.22  3b and has a class rate of 2.3 percent of the first $50,000 of 
 37.23  market value and 3.6 percent of the remainder, except that for 
 37.24  employment property located in a border city enterprise zone 
 37.25  designated pursuant to section 469.168, subdivision 4, paragraph 
 37.26  (c), the class rate of the first $100,000 of market value and 
 37.27  the class rate of the remainder is determined under paragraph 
 37.28  (a), unless the governing body of the city designated as an 
 37.29  enterprise zone determines that a specific parcel shall be 
 37.30  assessed pursuant to the first clause of this sentence.  The 
 37.31  governing body may provide for assessment under the first clause 
 37.32  of the preceding sentence only for property which is located in 
 37.33  an area which has been designated by the governing body for the 
 37.34  receipt of tax reductions authorized by section 469.171, 
 37.35  subdivision 1. 
 37.36     (c) Structures which are (i) located on property classified 
 38.1   as class 3a, (ii) constructed under an initial building permit 
 38.2   issued after January 2, 1996, (iii) located in a transit zone as 
 38.3   defined under section 473.3915, subdivision 3, (iv) located 
 38.4   within the boundaries of a school district, and (v) not 
 38.5   primarily used for retail or transient lodging purposes, shall 
 38.6   have a class rate of four percent on that portion of the market 
 38.7   value in excess of $100,000 and any market value under $100,000 
 38.8   that does not qualify for the three percent class rate under 
 38.9   paragraph (a).  As used in item (v), a structure is primarily 
 38.10  used for retail or transient lodging purposes if over 50 percent 
 38.11  of its square footage is used for those purposes.  The four 
 38.12  percent rate shall also apply to improvements to existing 
 38.13  structures that meet the requirements of items (i) to (v) if the 
 38.14  improvements are constructed under an initial building permit 
 38.15  issued after January 2, 1996, even if the remainder of the 
 38.16  structure was constructed prior to January 2, 1996.  For the 
 38.17  purposes of this paragraph, a structure shall be considered to 
 38.18  be located in a transit zone if any portion of the structure 
 38.19  lies within the zone.  If any property once eligible for 
 38.20  treatment under this paragraph ceases to remain eligible due to 
 38.21  revisions in transit zone boundaries, the property shall 
 38.22  continue to receive treatment under this paragraph for a period 
 38.23  of three years. 
 38.24     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 38.25  273.13, subdivision 25, is amended to read: 
 38.26     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 38.27  estate containing four or more units and used or held for use by 
 38.28  the owner or by the tenants or lessees of the owner as a 
 38.29  residence for rental periods of 30 days or more.  Class 4a also 
 38.30  includes hospitals licensed under sections 144.50 to 144.56, 
 38.31  other than hospitals exempt under section 272.02, and contiguous 
 38.32  property used for hospital purposes, without regard to whether 
 38.33  the property has been platted or subdivided.  Class 4a property 
 38.34  in a city with a population of 5,000 or less, that is (1) 
 38.35  located outside of the metropolitan area, as defined in section 
 38.36  473.121, subdivision 2, or outside any county contiguous to the 
 39.1   metropolitan area, and (2) whose city boundary is at least 15 
 39.2   miles from the boundary of any city with a population greater 
 39.3   than 5,000 has a class rate of 2.3 percent of market value ~~for~~ 
 39.4   ~~taxes payable in 1996 and thereafter~~.  All other class 4a 
 39.5   property has a class rate of ~~3.4~~ three percent of market value 
 39.6   ~~for taxes payable in 1996 and thereafter~~.  For purposes of this 
 39.7   paragraph, population has the same meaning given in section 
 39.8   477A.011, subdivision 3. 
 39.9      (b) Class 4b includes: 
 39.10     (1) residential real estate containing less than four 
 39.11  units, other than seasonal residential, and recreational; 
 39.12     (2) manufactured homes not classified under any other 
 39.13  provision; 
 39.14     (3) a dwelling, garage, and surrounding one acre of 
 39.15  property on a nonhomestead farm classified under subdivision 23, 
 39.16  paragraph (b).  
 39.17     Class 4b property has a class rate of ~~2.8~~ two percent of 
 39.18  market value ~~for taxes payable in 1992, 2.5 percent of market~~ 
 39.19  ~~value for taxes payable in 1993, and 2.3 percent of market value~~ 
 39.20  ~~for taxes payable in 1994 and thereafter~~. 
 39.21     (c) Class 4c property includes: 
 39.22     (1) a structure that is:  
 39.23     (i) situated on real property that is used for housing for 
 39.24  the elderly or for low- and moderate-income families as defined 
 39.25  in Title II, as amended through December 31, 1990, of the 
 39.26  National Housing Act or the Minnesota housing finance agency law 
 39.27  of 1971, as amended, or rules promulgated by the agency and 
 39.28  financed by a direct federal loan or federally insured loan made 
 39.29  pursuant to Title II of the Act; or 
 39.30     (ii) situated on real property that is used for housing the 
 39.31  elderly or for low- and moderate-income families as defined by 
 39.32  the Minnesota housing finance agency law of 1971, as amended, or 
 39.33  rules adopted by the agency pursuant thereto and financed by a 
 39.34  loan made by the Minnesota housing finance agency pursuant to 
 39.35  the provisions of the act.  
 39.36     This clause applies only to property of a nonprofit or 
 40.1   limited dividend entity.  Property is classified as class 4c 
 40.2   under this clause for 15 years from the date of the completion 
 40.3   of the original construction or substantial rehabilitation, or 
 40.4   for the original term of the loan.  
 40.5      (2) a structure that is: 
 40.6      (i) situated upon real property that is used for housing 
 40.7   lower income families or elderly or handicapped persons, as 
 40.8   defined in section 8 of the United States Housing Act of 1937, 
 40.9   as amended; and 
 40.10     (ii) owned by an entity which has entered into a housing 
 40.11  assistance payments contract under section 8 which provides 
 40.12  assistance for 100 percent of the dwelling units in the 
 40.13  structure, other than dwelling units intended for management or 
 40.14  maintenance personnel.  Property is classified as class 4c under 
 40.15  this clause for the term of the housing assistance payments 
 40.16  contract, including all renewals, or for the term of its 
 40.17  permanent financing, whichever is shorter; and 
 40.18     (3) a qualified low-income building as defined in section 
 40.19  42(c)(2) of the Internal Revenue Code of 1986, as amended 
 40.20  through December 31, 1990, that (i) receives a low-income 
 40.21  housing credit under section 42 of the Internal Revenue Code of 
 40.22  1986, as amended through December 31, 1990; or (ii) meets the 
 40.23  requirements of that section and receives public financing, 
 40.24  except financing provided under sections 469.174 to 469.179, 
 40.25  which contains terms restricting the rents; or (iii) meets the 
 40.26  requirements of section 273.1317.  Classification pursuant to 
 40.27  this clause is limited to a term of 15 years.  The public 
 40.28  financing received must be from at least one of the following 
 40.29  sources:  government issued bonds exempt from taxes under 
 40.30  section 103 of the Internal Revenue Code of 1986, as amended 
 40.31  through December 31, 1993, the proceeds of which are used for 
 40.32  the acquisition or rehabilitation of the building; programs 
 40.33  under section 221(d)(3), 202, or 236, of Title II of the 
 40.34  National Housing Act; rental housing program funds under Section 
 40.35  8 of the United States Housing Act of 1937 or the market rate 
 40.36  family graduated payment mortgage program funds administered by 
 41.1   the Minnesota housing finance agency that are used for the 
 41.2   acquisition or rehabilitation of the building; public financing 
 41.3   provided by a local government used for the acquisition or 
 41.4   rehabilitation of the building, including grants or loans from 
 41.5   federal community development block grants, HOME block grants, 
 41.6   or residential rental bonds issued under chapter 474A; or other 
 41.7   rental housing program funds provided by the Minnesota housing 
 41.8   finance agency for the acquisition or rehabilitation of the 
 41.9   building. 
 41.10     For all properties described in clauses (1), (2), and (3) 
 41.11  and in paragraph (d), the market value determined by the 
 41.12  assessor must be based on the normal approach to value using 
 41.13  normal unrestricted rents unless the owner of the property 
 41.14  elects to have the property assessed under Laws 1991, chapter 
 41.15  291, article 1, section 55.  If the owner of the property elects 
 41.16  to have the market value determined on the basis of the actual 
 41.17  restricted rents, as provided in Laws 1991, chapter 291, article 
 41.18  1, section 55, the property will be assessed at the rate 
 41.19  provided for class 4a or class 4b property, as appropriate.  
 41.20  Properties described in clauses (1)(ii), (3), and (4) may apply 
 41.21  to the assessor for valuation under Laws 1991, chapter 291, 
 41.22  article 1, section 55.  The land on which these structures are 
 41.23  situated has the class rate given in paragraph (b) if the 
 41.24  structure contains fewer than four units, and the class rate 
 41.25  given in paragraph (a) if the structure contains four or more 
 41.26  units.  This clause applies only to the property of a nonprofit 
 41.27  or limited dividend entity.  
 41.28     (4) a parcel of land, not to exceed one acre, and its 
 41.29  improvements or a parcel of unimproved land, not to exceed one 
 41.30  acre, if it is owned by a neighborhood real estate trust and at 
 41.31  least 60 percent of the dwelling units, if any, on all land 
 41.32  owned by the trust are leased to or occupied by lower income 
 41.33  families or individuals.  This clause does not apply to any 
 41.34  portion of the land or improvements used for nonresidential 
 41.35  purposes.  For purposes of this clause, a lower income family is 
 41.36  a family with an income that does not exceed 65 percent of the 
 42.1   median family income for the area, and a lower income individual 
 42.2   is an individual whose income does not exceed 65 percent of the 
 42.3   median individual income for the area, as determined by the 
 42.4   United States Secretary of Housing and Urban Development.  For 
 42.5   purposes of this clause, "neighborhood real estate trust" means 
 42.6   an entity which is certified by the governing body of the 
 42.7   municipality in which it is located to have the following 
 42.8   characteristics: 
 42.9      (a) it is a nonprofit corporation organized under chapter 
 42.10  317A; 
 42.11     (b) it has as its principal purpose providing housing for 
 42.12  lower income families in a specific geographic community 
 42.13  designated in its articles or bylaws; 
 42.14     (c) it limits membership with voting rights to residents of 
 42.15  the designated community; and 
 42.16     (d) it has a board of directors consisting of at least 
 42.17  seven directors, 60 percent of whom are members with voting 
 42.18  rights and, to the extent feasible, 25 percent of whom are 
 42.19  elected by resident members of buildings owned by the trust; and 
 42.20     (5) except as provided in subdivision 22, paragraph (c), 
 42.21  real property devoted to temporary and seasonal residential 
 42.22  occupancy for recreation purposes, including real property 
 42.23  devoted to temporary and seasonal residential occupancy for 
 42.24  recreation purposes and not devoted to commercial purposes for 
 42.25  more than 250 days in the year preceding the year of 
 42.26  assessment.  For purposes of this clause, property is devoted to 
 42.27  a commercial purpose on a specific day if any portion of the 
 42.28  property is used for residential occupancy, and a fee is charged 
 42.29  for residential occupancy.  Class 4c also includes commercial 
 42.30  use real property used exclusively for recreational purposes in 
 42.31  conjunction with class 4c property devoted to temporary and 
 42.32  seasonal residential occupancy for recreational purposes, up to 
 42.33  a total of two acres, provided the property is not devoted to 
 42.34  commercial recreational use for more than 250 days in the year 
 42.35  preceding the year of assessment and is located within two miles 
 42.36  of the class 4c property with which it is used.  Class 4c 
 43.1   property classified in this clause also includes the remainder 
 43.2   of class 1c resorts.  Owners of real property devoted to 
 43.3   temporary and seasonal residential occupancy for recreation 
 43.4   purposes and all or a portion of which was devoted to commercial 
 43.5   purposes for not more than 250 days in the year preceding the 
 43.6   year of assessment desiring classification as class 1c or 4c, 
 43.7   must submit a declaration to the assessor designating the cabins 
 43.8   or units occupied for 250 days or less in the year preceding the 
 43.9   year of assessment by January 15 of the assessment year.  Those 
 43.10  cabins or units and a proportionate share of the land on which 
 43.11  they are located will be designated class 1c or 4c as otherwise 
 43.12  provided.  The remainder of the cabins or units and a 
 43.13  proportionate share of the land on which they are located will 
 43.14  be designated as class 3a.  The first $100,000 of the market 
 43.15  value of the remainder of the cabins or units and a 
 43.16  proportionate share of the land on which they are located shall 
 43.17  have a class rate of three percent.  The owner of property 
 43.18  desiring designation as class 1c or 4c property must provide 
 43.19  guest registers or other records demonstrating that the units 
 43.20  for which class 1c or 4c designation is sought were not occupied 
 43.21  for more than 250 days in the year preceding the assessment if 
 43.22  so requested.  The portion of a property operated as a (1) 
 43.23  restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 43.24  facility operated on a commercial basis not directly related to 
 43.25  temporary and seasonal residential occupancy for recreation 
 43.26  purposes shall not qualify for class 1c or 4c; 
 43.27     (6) real property up to a maximum of one acre of land owned 
 43.28  by a nonprofit community service oriented organization; provided 
 43.29  that the property is not used for a revenue-producing activity 
 43.30  for more than six days in the calendar year preceding the year 
 43.31  of assessment and the property is not used for residential 
 43.32  purposes on either a temporary or permanent basis.  For purposes 
 43.33  of this clause, a "nonprofit community service oriented 
 43.34  organization" means any corporation, society, association, 
 43.35  foundation, or institution organized and operated exclusively 
 43.36  for charitable, religious, fraternal, civic, or educational 
 44.1   purposes, and which is exempt from federal income taxation 
 44.2   pursuant to section 501(c)(3), (10), or (19) of the Internal 
 44.3   Revenue Code of 1986, as amended through December 31, 1990.  For 
 44.4   purposes of this clause, "revenue-producing activities" shall 
 44.5   include but not be limited to property or that portion of the 
 44.6   property that is used as an on-sale intoxicating liquor or 3.2 
 44.7   percent malt liquor establishment licensed under chapter 340A, a 
 44.8   restaurant open to the public, bowling alley, a retail store, 
 44.9   gambling conducted by organizations licensed under chapter 349, 
 44.10  an insurance business, or office or other space leased or rented 
 44.11  to a lessee who conducts a for-profit enterprise on the 
 44.12  premises.  Any portion of the property which is used for 
 44.13  revenue-producing activities for more than six days in the 
 44.14  calendar year preceding the year of assessment shall be assessed 
 44.15  as class 3a.  The use of the property for social events open 
 44.16  exclusively to members and their guests for periods of less than 
 44.17  24 hours, when an admission is not charged nor any revenues are 
 44.18  received by the organization shall not be considered a 
 44.19  revenue-producing activity; 
 44.20     (7) post-secondary student housing of not more than one 
 44.21  acre of land that is owned by a nonprofit corporation organized 
 44.22  under chapter 317A and is used exclusively by a student 
 44.23  cooperative, sorority, or fraternity for on-campus housing or 
 44.24  housing located within two miles of the border of a college 
 44.25  campus; and 
 44.26     (8) manufactured home parks as defined in section 327.14, 
 44.27  subdivision 3. 
 44.28     Class 4c property has a class rate of 2.3 percent of market 
 44.29  value, except that (i) for each parcel of seasonal residential 
 44.30  recreational property not used for commercial purposes under 
 44.31  clause (5) the first $72,000 of market value on each parcel has 
 44.32  a class rate of 1.9 percent for taxes payable in 1997 and 1.8 
 44.33  percent for taxes payable in 1998 and thereafter, and the market 
 44.34  value of each parcel that exceeds $72,000 has a class rate of 
 44.35  2.5 percent, and (ii) manufactured home parks assessed under 
 44.36  clause (8) have a class rate of two percent for taxes payable in 
 45.1   1996, and thereafter.  
 45.2      (d) Class 4d property includes: 
 45.3      (1) a structure that is: 
 45.4      (i) situated on real property that is used for housing for 
 45.5   the elderly or for low and moderate income families as defined 
 45.6   by the Farmers Home Administration; 
 45.7      (ii) located in a municipality of less than 10,000 
 45.8   population; and 
 45.9      (iii) financed by a direct loan or insured loan from the 
 45.10  Farmers Home Administration.  Property is classified under this 
 45.11  clause for 15 years from the date of the completion of the 
 45.12  original construction or for the original term of the loan.  
 45.13     The class rates in paragraph (c), clauses (1), (2), and (3) 
 45.14  and this clause apply to the properties described in them, only 
 45.15  in proportion to occupancy of the structure by elderly or 
 45.16  handicapped persons or low and moderate income families as 
 45.17  defined in the applicable laws unless construction of the 
 45.18  structure had been commenced prior to January 1, 1984; or the 
 45.19  project had been approved by the governing body of the 
 45.20  municipality in which it is located prior to June 30, 1983; or 
 45.21  financing of the project had been approved by a federal or state 
 45.22  agency prior to June 30, 1983.  For those properties, 4c or 4d 
 45.23  classification is available only for those units meeting the 
 45.24  requirements of section 273.1318. 
 45.25     Classification under this clause is only available to 
 45.26  property of a nonprofit or limited dividend entity. 
 45.27     In the case of a structure financed or refinanced under any 
 45.28  federal or state mortgage insurance or direct loan program 
 45.29  exclusively for housing for the elderly or for housing for the 
 45.30  handicapped, a unit shall be considered occupied so long as it 
 45.31  is actually occupied by an elderly or handicapped person or, if 
 45.32  vacant, is held for rental to an elderly or handicapped person. 
 45.33     (2) For taxes payable in 1992, 1993, and 1994, only, 
 45.34  buildings and appurtenances, together with the land upon which 
 45.35  they are located, leased by the occupant under the community 
 45.36  lending model lease-purchase mortgage loan program administered 
 46.1   by the Federal National Mortgage Association, provided the 
 46.2   occupant's income is no greater than 60 percent of the county or 
 46.3   area median income, adjusted for family size and the building 
 46.4   consists of existing single family or duplex housing.  The lease 
 46.5   agreement must provide for a portion of the lease payment to be 
 46.6   escrowed as a nonrefundable down payment on the housing.  To 
 46.7   qualify under this clause, the taxpayer must apply to the county 
 46.8   assessor by May 30 of each year.  The application must be 
 46.9   accompanied by an affidavit or other proof required by the 
 46.10  assessor to determine qualification under this clause. 
 46.11     (3) Qualifying buildings and appurtenances, together with 
 46.12  the land upon which they are located, leased for a period of up 
 46.13  to five years by the occupant under a lease-purchase program 
 46.14  administered by the Minnesota housing finance agency or a 
 46.15  housing and redevelopment authority authorized under sections 
 46.16  469.001 to 469.047, provided the occupant's income is no greater 
 46.17  than 80 percent of the county or area median income, adjusted 
 46.18  for family size, and the building consists of two or less 
 46.19  dwelling units.  The lease agreement must provide for a portion 
 46.20  of the lease payment to be escrowed as a nonrefundable down 
 46.21  payment on the housing.  The administering agency shall verify 
 46.22  the occupants income eligibility and certify to the county 
 46.23  assessor that the occupant meets the income criteria under this 
 46.24  paragraph.  To qualify under this clause, the taxpayer must 
 46.25  apply to the county assessor by May 30 of each year.  For 
 46.26  purposes of this section, "qualifying buildings and 
 46.27  appurtenances" shall be defined as one or two unit residential 
 46.28  buildings which are unoccupied and have been abandoned and 
 46.29  boarded for at least six months. 
 46.30     Class 4d property has a class rate of two percent of market 
 46.31  value except that property classified under clause (3), shall 
 46.32  have the same class rate as class 1a property. 
 46.33     (e) Residential rental property that would otherwise be 
 46.34  assessed as class 4 property under paragraph (a); paragraph (b), 
 46.35  clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 
 46.36  (4), is assessed at the class rate applicable to it under 
 47.1   Minnesota Statutes 1988, section 273.13, if it is found to be a 
 47.2   substandard building under section 273.1316.  Residential rental 
 47.3   property that would otherwise be assessed as class 4 property 
 47.4   under paragraph (d) is assessed at 2.3 percent of market value 
 47.5   if it is found to be a substandard building under section 
 47.6   273.1316. 
 47.7      Sec. 3.  [TIF GRANTS; APPROPRIATIONS.] 
 47.8      (a) The commissioner of revenue shall pay grants to 
 47.9   municipalities for deficits in tax increment financing districts 
 47.10  caused by the changes in class rates under this article.  
 47.11  Municipalities must submit applications for the grants in a form 
 47.12  prescribed by the commissioner by no later than March 1 for 
 47.13  taxes payable during the calendar year.  The maximum grant 
 47.14  equals the lesser of: 
 47.15     (1) the reduction in the tax increment financing district's 
 47.16  revenues derived from increment resulting from the class rate 
 47.17  reductions under this article; and 
 47.18     (2) the municipality's total available tax increments, 
 47.19  including those from previous years, less the amount due during 
 47.20  the calendar year to pay bonds issued and sold before and 
 47.21  binding contracts entered into before the day following final 
 47.22  enactment of this act. 
 47.23     If the total applications for grants exceed the amount 
 47.24  available under the appropriation, the commissioner shall 
 47.25  proportionately reduce the grant for each municipality.  These 
 47.26  grants are available for calendar years 1998, 1999, and 2000. 
 47.27     (b) $19,000,000 is appropriated to the commissioner of 
 47.28  revenue for purposes of this section.  This appropriation does 
 47.29  not cancel until June 30, 2001. 
 47.30     Sec. 4.  [EFFECTIVE DATE.] 
 47.31     (a) The provisions of this article take effect as provided 
 47.32  in paragraph (b) only if the constitutional amendment proposed 
 47.33  to the people by article 1, section 1, is adopted in the 1996 
 47.34  general election. 
 47.35     (b) Sections 1 and 2 are effective for taxes payable in 
 47.36  1998 and subsequent years. 
 48.1                              ARTICLE 4
 48.2                         LOCAL GOVERNMENT AID
 48.3      Section 1.  Minnesota Statutes 1994, section 477A.011, is 
 48.4   amended by adding a subdivision to read: 
 48.5      Subd. 32a.  [POVERTY PERCENTAGE.] "Poverty percentage" for 
 48.6   a city is 100 times the ratio of the number of households below 
 48.7   the poverty line to the total number of households in the city 
 48.8   according to the most recent federal census. 
 48.9      Sec. 2.  Minnesota Statutes 1994, section 477A.011, is 
 48.10  amended by adding a subdivision to read: 
 48.11     Subd. 33a.  [SPRAWL AREA.] "Sprawl area" is the area of a 
 48.12  circle centered around a city's geographic center.  The radius 
 48.13  of the circle, in miles, is equal to the sum of (1) 3.5 and (2) 
 48.14  0.00004 times the city's 1990 population. 
 48.15     Sec. 3.  Minnesota Statutes 1994, section 477A.011, is 
 48.16  amended by adding a subdivision to read: 
 48.17     Subd. 33b.  [ADJUSTED POPULATION.] For a city with a 
 48.18  population of 5,000 or more which is located outside of the 
 48.19  metropolitan area, the "adjusted population" is equal to the 
 48.20  city's population plus the sum of the 1990 population, outside 
 48.21  of any city boundary, that is located within the sprawl area for 
 48.22  that city.  If two or more cities have overlapping sprawl areas, 
 48.23  the population in the overlapping area that is outside of any 
 48.24  city limits shall be divided between the cities based on each 
 48.25  city's 1990 population compared to the total population of the 
 48.26  affected cities.  For a city with a population less than 5,000 
 48.27  or a city located in the metropolitan area, adjusted population 
 48.28  is equal to the city's population. 
 48.29     Sec. 4.  Minnesota Statutes 1994, section 477A.011, is 
 48.30  amended by adding a subdivision to read: 
 48.31     Subd. 33c.  [CITY DECLINE FACTOR.] "City decline factor" 
 48.32  for a city is the product of the city's (1) pre-1940 housing 
 48.33  percentage, (2) commercial industrial percentage, and (3) 
 48.34  population decline percentage. 
 48.35     Sec. 5.  Minnesota Statutes 1994, section 477A.011, 
 48.36  subdivision 34, is amended to read: 
 49.1      Subd. 34.  [CITY REVENUE NEED.] (a) For a city with a 
 49.2   population equal to or greater than 2,500, "city revenue need" 
 49.3   is the sum of (1) ~~3.462312~~ 6.110762 times the pre-1940 housing 
 49.4   percentage; plus (2) ~~2.093826~~ 5.744915 times the commercial 
 49.5   industrial percentage; plus (3) ~~6.862552~~ 0.024686 times the 
 49.6   ~~population~~ city decline ~~percentage~~ factor; plus 
 49.7   (4) ~~.00026~~ 9.784552 times the ~~city population; plus (5) 152.0141~~ 
 49.8   poverty percentage. 
 49.9      (b) For a city with a population less than 2,500, "city 
 49.10  revenue need" is the sum of (1) 1.795919 times the pre-1940 
 49.11  housing percentage; plus (2) 1.562138 times the commercial 
 49.12  industrial percentage; plus (3) 4.177568 times the population 
 49.13  decline percentage; plus (4) 1.04013 times the transformed 
 49.14  population; minus (5) 107.475. 
 49.15     (c) The city revenue need cannot be less than zero. 
 49.16     (d) For calendar year 1995 and subsequent years, the city 
 49.17  revenue need for a city with a population less than 2,500, as 
 49.18  determined in paragraphs ~~(a) to~~ (b) and (c), is multiplied by 
 49.19  the ratio of the annual implicit price deflator for state and 
 49.20  local government purchases, as prepared by the United States 
 49.21  Department of Commerce, for the most recently available year to 
 49.22  the 1993 implicit price deflator for state and local government 
 49.23  purchases. 
 49.24     (e) For calendar year 1998 and subsequent years, the city 
 49.25  revenue need for a city with a population of 2,500 or more, as 
 49.26  determined in paragraphs (a) and (c), is multiplied by the ratio 
 49.27  of the annual implicit price deflator for state and local 
 49.28  government purchases, as prepared by the United States 
 49.29  Department of Commerce, for the most recent available year to 
 49.30  the 1996 implicit price deflator for state and local government 
 49.31  purchases. 
 49.32     (f) For cities with a population of 1,200 or less which are 
 49.33  located in a tax relief area, as defined in section 273.134, the 
 49.34  city revenue need determined under paragraphs (a) to (e) shall 
 49.35  be increased by 50 percent. 
 49.36     Sec. 6.  Minnesota Statutes 1994, section 477A.013, 
 50.1   subdivision 8, is amended to read: 
 50.2      Subd. 8.  [CITY FORMULA AID.] In calendar year ~~1994~~ 1997 
 50.3   and subsequent years, the formula aid for a city is equal to the 
 50.4   product of (1) the need increase percentage ~~multiplied by the~~ 
 50.5   ~~difference between (1)~~ (2) the city's revenue need multiplied by 
 50.6   its adjusted population, and ~~(2) the city's net tax capacity~~ 
 50.7   ~~multiplied by the tax effort rate~~ (3) the square root of the 
 50.8   difference between (i) 4.14 and (ii) the ratio of the city's net 
 50.9   tax capacity to 215.06.  No city may have a formula aid amount 
 50.10  less than zero.  The need increase percentage must be the same 
 50.11  for all cities.  
 50.12     ~~Notwithstanding the prior sentence, in 1995 only, the need~~ 
 50.13  ~~increase percentage for a city shall be twice the need increase~~ 
 50.14  ~~percentage applicable to other cities if:~~  
 50.15     ~~(1) the city, in 1992 or 1993, transferred an amount from~~ 
 50.16  ~~governmental funds to their sewer and water fund, and~~ 
 50.17     ~~(2) the amount transferred exceeded their net levy for~~ 
 50.18  ~~taxes payable in the year in which the transfer occurred.~~ 
 50.19     The applicable need increase percentage ~~or percentages~~ must 
 50.20  be calculated by the department of revenue so that the total of 
 50.21  the aid under subdivision 9 equals the total amount available 
 50.22  for aid under section 477A.03.  
 50.23     Sec. 7.  Minnesota Statutes 1994, section 477A.013, 
 50.24  subdivision 9, is amended to read: 
 50.25     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
 50.26  1994 and thereafter, each city shall receive an aid distribution 
 50.27  equal to ~~the sum of (1) the city formula aid under subdivision~~ 
 50.28  ~~8, and (2) its city aid base~~ its city formula aid, subject to 
 50.29  the limits in paragraphs (b) and (c). 
 50.30     (b) ~~The percentage increase for a first class city in~~ 
 50.31  ~~calendar year 1995 and thereafter shall not exceed the~~ 
 50.32  ~~percentage increase in the sum of the aid to all cities under~~ 
 50.33  ~~this section in the current calendar year compared to the sum of~~ 
 50.34  ~~the aid to all cities in the previous year.~~ 
 50.35     ~~(c)~~ The total aid for any city~~, except a first class city,~~ 
 50.36  shall not exceed the sum of (1) ~~ten~~ 17 percent of the city's net 
 51.1   levy for the year prior to the aid distribution plus (2) its 
 51.2   total aid in the previous year before any ~~increases or~~ decreases 
 51.3   under ~~sections 16A.711, subdivision 5, and~~ section 477A.0132. 
 51.4      ~~(d) Notwithstanding paragraph (c), in 1995 only, for cities~~ 
 51.5   ~~which in 1992 or 1993 transferred an amount from governmental~~ 
 51.6   ~~funds to their sewer and water fund in an amount greater than~~ 
 51.7   ~~their net levy for taxes payable in the year in which the~~ 
 51.8   ~~transfer occurred, the total aid shall not exceed the sum of (1)~~ 
 51.9   ~~20 percent of the city's net levy for the year prior to the aid~~ 
 51.10  ~~distribution plus (2) its total aid in the previous year before~~ 
 51.11  ~~any increases or decreases under sections 16A.711, subdivision~~ 
 51.12  ~~5, and 477A.0132.~~ 
 51.13     (c) Notwithstanding paragraphs (a) and (b), if a city with 
 51.14  a population of 2,500 or more has a reduction in its net tax 
 51.15  capacity of 20 percent or more in an assessment year compared to 
 51.16  the previous year, the following limits and minimums shall apply:
 51.17     (1) for aid distributed in the year immediately following 
 51.18  the assessment year of the net tax capacity loss, the aid may 
 51.19  not increase by more than an amount equal to the product of (i) 
 51.20  17 percent plus a percent equal to the percent loss in net tax 
 51.21  capacity and (ii) the city's net levy for the year prior to the 
 51.22  aid distribution; 
 51.23     (2) for aid distributed in the five years following the 
 51.24  assessment year of the net tax capacity loss, the aid may not be 
 51.25  less than an amount equal to the following: 
 51.26     (i) for the first year, the amount of the net tax capacity 
 51.27  loss multiplied by the city tax rate from the previous year; 
 51.28     (ii) for the second year, 80 percent of the minimum amount 
 51.29  guaranteed in the first year; 
 51.30     (iii) for the third year, 60 percent of the minimum amount 
 51.31  guaranteed in the first year; 
 51.32     (iv) for the fourth year, 40 percent of the minimum amount 
 51.33  guaranteed in the first year; 
 51.34     (v) for the fifth year, 20 percent of the minimum amount 
 51.35  guaranteed in the first year. 
 51.36     A city must notify the commissioner of revenue by July 1 of 
 52.1   the year prior to the first year it would qualify for provisions 
 52.2   under this paragraph in order to be eligible for aid adjustments 
 52.3   under this paragraph.  The city must also furnish the 
 52.4   commissioner with any information needed to administer the 
 52.5   provisions of this paragraph. 
 52.6      Sec. 8.  Minnesota Statutes 1995 Supplement, section 
 52.7   477A.03, subdivision 2, is amended to read: 
 52.8      Subd. 2.  [ANNUAL APPROPRIATION.] A sum sufficient to 
 52.9   discharge the duties imposed by sections 477A.011 to 477A.014 is 
 52.10  annually appropriated from the general fund to the commissioner 
 52.11  of revenue.  For aids payable in ~~1996~~ 1997 and thereafter, the 
 52.12  total aids paid under sections ~~477A.013, subdivision 9,~~ 
 52.13  477A.0121 and 477A.0122 are the amounts certified to be paid in 
 52.14  the previous year, adjusted for inflation as provided under 
 52.15  subdivision 3.  Aid payments to ~~counties~~ cities under section 
 52.16  ~~477A.0121~~ 477A.013, subdivision 9, are limited to ~~$20,265,000 in~~ 
 52.17  ~~1996~~ $400,000,000 in 1997.  For aid payable in ~~1997~~ 1998 and 
 52.18  thereafter, the total aids paid under section ~~477A.0121~~ 
 52.19  477A.013, subdivision 9, are the amounts certified to be paid in 
 52.20  the previous year, adjusted for inflation as provided under 
 52.21  subdivision 3. 
 52.22     Sec. 9.  [REPEALER.] 
 52.23     Minnesota Statutes 1994, sections 477A.011, subdivisions 35 
 52.24  and 37; 477A.013, subdivision 6; and 477A.014, subdivision 1a; 
 52.25  and Minnesota Statutes 1995 Supplement, section 477A.011, 
 52.26  subdivision 36, are repealed. 
 52.27     Sec. 10.  [EFFECTIVE DATE.] 
 52.28     (a) The provisions of this article take effect as provided 
 52.29  in paragraph (b) only if the constitutional amendment proposed 
 52.30  to the people by article 1, section 1, is adopted in the 1996 
 52.31  general election.  
 52.32     (b) Sections 1 to 9 are effective for aids payable in 1997 
 52.33  and thereafter. 
 52.34                             ARTICLE 5
 52.35                        PROPERTY TAX REFUND
 52.36     Section 1.  Minnesota Statutes 1995 Supplement, section 
 53.1   290A.03, subdivision 6, is amended to read: 
 53.2      Subd. 6.  [HOMESTEAD.] "Homestead" means any one of the 
 53.3   following: 
 53.4      (1) The dwelling occupied as the claimant's principal 
 53.5   residence and so much of the land surrounding it, not exceeding 
 53.6   ten acres, as is reasonably necessary for use of the dwelling as 
 53.7   a home and any other property used for purposes of a homestead 
 53.8   as defined in section 273.13, subdivision 22~~, except for~~ 
 53.9   ~~agricultural land assessed as part of a homestead pursuant to~~ 
 53.10  ~~section 273.13, subdivision 23, "homestead" is limited to 320~~ 
 53.11  ~~acres or, where the farm homestead is rented, one acre~~.  The 
 53.12  homestead may be owned or rented and may be a part of a 
 53.13  multidwelling or multipurpose building and the land on which it 
 53.14  is built.  
 53.15     (2) The house, garage, and immediately surrounding one acre 
 53.16  of land, in the case of an agricultural homestead classified 
 53.17  under section 273.13, subdivision 23. 
 53.18     (3) A manufactured home, as defined in section 273.125, 
 53.19  subdivision 8, or a park trailer taxed as a manufactured home 
 53.20  under section 168.012, subdivision 9, assessed as personal 
 53.21  property may be a dwelling for purposes of this subdivision. 
 53.22     Sec. 2.  Minnesota Statutes 1994, section 290A.03, is 
 53.23  amended by adding a subdivision to read: 
 53.24     Subd. 6a.  [FARM HOMESTEAD.] "Farm homestead" means the 
 53.25  house occupied as the claimant's principal residence, garage, 
 53.26  and up to 320 acres of the agricultural land assessed as part of 
 53.27  the homestead under section 273.13, subdivision 23, paragraph 
 53.28  (a), including any other improvements located on the land. 
 53.29     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
 53.30  290A.03, subdivision 13, is amended to read: 
 53.31     Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
 53.32  payable" means the property tax exclusive of special 
 53.33  assessments, penalties, and interest payable on a claimant's 
 53.34  homestead or farm homestead before reductions made under section 
 53.35  273.13 but after deductions made under sections 273.135, 
 53.36  273.1391, 273.42, subdivision 2, and any other state paid 
 54.1   property tax credits in any calendar year.  In the case of a 
 54.2   claimant who makes ground lease payments, "property taxes 
 54.3   payable" includes the amount of the payments directly 
 54.4   attributable to the property taxes assessed against the parcel 
 54.5   on which the house is located.  No apportionment or reduction of 
 54.6   the "property taxes payable" shall be required for the use of a 
 54.7   portion of the claimant's homestead or farm homestead for a 
 54.8   business purpose if the claimant does not deduct any business 
 54.9   depreciation expenses for the use of a portion of the 
 54.10  homestead or farm homestead in the determination of federal 
 54.11  adjusted gross income.  For homesteads which are manufactured 
 54.12  homes as defined in section 273.125, subdivision 8, and for 
 54.13  homesteads which are park trailers taxed as manufactured homes 
 54.14  under section 168.012, subdivision 9, "property taxes payable" 
 54.15  shall also include the amount of the gross rent paid in the 
 54.16  preceding year for the site on which the homestead is located, 
 54.17  which is attributable to the net tax paid on the site.  The 
 54.18  amount attributable to property taxes shall be determined by 
 54.19  multiplying the net tax on the parcel by a fraction, the 
 54.20  numerator of which is the gross rent paid for the calendar year 
 54.21  for the site and the denominator of which is the gross rent paid 
 54.22  for the calendar year for the parcel.  When a homestead or farm 
 54.23  homestead is owned by two or more persons as joint tenants or 
 54.24  tenants in common, such tenants shall determine between them 
 54.25  which tenant may claim the property taxes payable on the 
 54.26  homestead or farm homestead.  If they are unable to agree, the 
 54.27  matter shall be referred to the commissioner of revenue whose 
 54.28  decision shall be final.  Property taxes are considered payable 
 54.29  in the year prescribed by law for payment of the taxes. 
 54.30     In the case of a claim relating to "property taxes 
 54.31  payable," the claimant must have owned and occupied the 
 54.32  homestead or farm homestead on January 2 of the year in which 
 54.33  the tax is payable and (i) the property must have been 
 54.34  classified as homestead property pursuant to section 273.13, 
 54.35  subdivision 22 or 23, on or before December 15 of the assessment 
 54.36  year to which the "property taxes payable" relate; or (ii) the 
 55.1   claimant must provide documentation from the local assessor that 
 55.2   application for homestead classification has been made on or 
 55.3   before December 15 of the year in which the "property taxes 
 55.4   payable" were payable and that the assessor has approved the 
 55.5   application. 
 55.6      Sec. 4.  Minnesota Statutes 1994, section 290A.04, 
 55.7   subdivision 1, is amended to read: 
 55.8      Subdivision 1.  A refund shall be allowed each claimant in 
 55.9   the amount that property taxes payable or rent constituting 
 55.10  property taxes exceed the percentage of the household income of 
 55.11  the claimant specified in subdivision 2 ~~or~~, 2a, or 2j in the 
 55.12  year for which the taxes were levied or in the year in which the 
 55.13  rent was paid as specified in subdivision 2 ~~or~~, 2a, or 2j.  If 
 55.14  the amount of property taxes payable or rent constituting 
 55.15  property taxes is equal to or less than the percentage of the 
 55.16  household income of the claimant specified in subdivision 2 ~~or~~, 
 55.17  2a, or 2j in the year for which the taxes were levied or in the 
 55.18  year in which the rent was paid, the claimant shall not be 
 55.19  eligible for a state refund pursuant to this section.  A 
 55.20  claimant whose property taxes payable relate to a farm homestead 
 55.21  may choose to use either:  
 55.22     (1) the property taxes payable on the homestead as defined 
 55.23  in section 290A.03, subdivision 6, to calculate and claim a 
 55.24  refund using the schedule in subdivision 2; or 
 55.25     (2) the property taxes payable on the farm homestead as 
 55.26  defined in section 290A.03, subdivision 6a, to calculate and 
 55.27  claim a refund using the schedule in subdivision 2j. 
 55.28     Sec. 5.  Minnesota Statutes 1994, section 290A.04, 
 55.29  subdivision 2, is amended to read: 
 55.30     Subd. 2.  [HOMEOWNERS.] A claimant whose property taxes 
 55.31  payable are in excess of the percentage of the household income 
 55.32  stated below shall pay an amount equal to the percent of income 
 55.33  shown for the appropriate household income level along with the 
 55.34  percent to be paid by the claimant of the remaining amount of 
 55.35  property taxes payable.  The state refund equals the amount of 
 55.36  property taxes payable that remain, up to the state refund 
 56.1   amount shown below.  
 56.2                         Percent           Percent    Maximum
 56.3   Household Income     of Income          Paid by     State
 56.4                                           Claimant    Refund
 56.5       ~~$0 to 1,029~~     ~~1.2 percent~~        ~~18 percent~~   ~~$440~~
 56.6    ~~1,030 to 2,059~~     ~~1.3 percent~~        ~~18 percent~~   ~~$440~~
 56.7    ~~2,060 to 3,099~~     ~~1.4 percent~~        ~~20 percent~~   ~~$440~~
 56.8    ~~3,100 to 4,129~~     ~~1.6 percent~~        ~~20 percent~~   ~~$440~~
 56.9    ~~4,130 to 5,159~~     ~~1.7 percent~~        ~~20 percent~~   ~~$440~~
 56.10   ~~5,160 to 7,229~~     ~~1.9 percent~~        ~~25 percent~~   ~~$440~~
 56.11   ~~7,230 to 8,259~~     ~~2.1 percent~~        ~~25 percent~~   ~~$440~~
 56.12   ~~8,260 to 9,289~~     ~~2.2 percent~~        ~~25 percent~~   ~~$440~~
 56.13   ~~9,290 to 10,319~~    ~~2.3 percent~~        ~~30 percent~~   ~~$440~~
 56.14  ~~10,320 to 11,349~~    ~~2.4 percent~~        ~~30 percent~~   ~~$440~~
 56.15  ~~11,350 to 12,389~~    ~~2.5 percent~~        ~~30 percent~~   ~~$440~~
 56.16  ~~12,390 to 14,449~~    ~~2.6 percent~~        ~~30 percent~~   ~~$440~~
 56.17  ~~14,450 to 15,479~~    ~~2.8 percent~~        ~~35 percent~~   ~~$440~~
 56.18  ~~15,480 to 16,509~~    ~~3.0 percent~~        ~~35 percent~~   ~~$440~~
 56.19  ~~16,510 to 17,549~~    ~~3.2 percent~~        ~~40 percent~~   ~~$440~~
 56.20  ~~17,550 to 21,669~~    ~~3.3 percent~~        ~~40 percent~~   ~~$440~~
 56.21  ~~21,670 to 24,769~~    ~~3.4 percent~~        ~~45 percent~~   ~~$440~~
 56.22  ~~24,770 to 30,959~~    ~~3.5 percent~~        ~~45 percent~~   ~~$440~~
 56.23  ~~30,960 to 36,119~~    ~~3.5 percent~~        ~~45 percent~~   ~~$440~~
 56.24  ~~36,120 to 41,279~~    ~~3.7 percent~~        ~~50 percent~~   ~~$440~~
 56.25  ~~41,280 to 58,829~~    ~~4.0 percent~~        ~~50 percent~~   ~~$440~~
 56.26  ~~58,830 to 59,859~~    ~~4.0 percent~~        ~~50 percent~~   ~~$310~~
 56.27  ~~59,860 to 60,889~~    ~~4.0 percent~~        ~~50 percent~~   ~~$210~~
 56.28  ~~60,890 to 61,929~~    ~~4.0 percent~~        ~~50 percent~~   ~~$100~~ 
 56.29      $0 to 1,059     1.2 percent        18 percent   $850
 56.30   1,060 to 2,119     1.3 percent        18 percent   $850
 56.31   2,120 to 3,188     1.4 percent        20 percent   $850
 56.32   3,189 to 4,247     1.6 percent        20 percent   $850
 56.33   4,248 to 5,307     1.7 percent        20 percent   $850
 56.34   5,308 to 7,435     1.9 percent        25 percent   $850
 56.35   7,436 to 8,495     2.1 percent        25 percent   $850
 56.36   8,496 to 9,554     2.2 percent        25 percent   $850
 56.37   9,555 to 10,613    2.3 percent        30 percent   $850
 56.38  10,614 to 11,673    2.4 percent        30 percent   $850
 56.39  11,674 to 12,742    2.5 percent        30 percent   $850
 56.40  12,743 to 14,861    2.6 percent        30 percent   $850
 56.41  14,862 to 15,920    2.8 percent        35 percent   $850
 56.42  15,921 to 16,979    3.0 percent        35 percent   $850
 56.43  16,980 to 18,049    3.2 percent        40 percent   $850
 56.44  18,050 to 22,286    3.3 percent        40 percent   $850
 56.45  22,287 to 25,474    3.4 percent        45 percent   $850
 56.46  25,475 to 31,840    3.5 percent        45 percent   $850
 56.47  31,841 to 37,147    3.5 percent        45 percent   $850
 56.48  37,148 to 42,453    3.7 percent        50 percent   $850
 56.49  42,454 to 60,502    4.0 percent        50 percent   $850
 56.50  60,503 to 61,561    4.0 percent        50 percent   $600
 56.51  61,562 to 62,621    4.0 percent        50 percent   $300
 56.52  62,622 to 63,689    4.0 percent        50 percent   $100 
 56.53     The payment made to a claimant shall be the amount of the 
 56.54  state refund calculated under this subdivision.  No payment is 
 56.55  allowed if the claimant's household income is ~~$61,930~~ $63,690 or 
 56.56  more. 
 56.57     Sec. 6.  Minnesota Statutes 1994, section 290A.04, 
 56.58  subdivision 2a, is amended to read: 
 56.59     Subd. 2a.  [RENTERS.] A claimant whose rent constituting 
 56.60  property taxes exceeds the percentage of the household income 
 56.61  stated below must pay an amount equal to the percent of income 
 57.1   shown for the appropriate household income level along with the 
 57.2   percent to be paid by the claimant of the remaining amount of 
 57.3   rent constituting property taxes.  The state refund equals the 
 57.4   amount of rent constituting property taxes that remain, up to 
 57.5   the maximum state refund amount shown below.  
 57.6                         Percent           Percent      Maximum
 57.7   Household Income     of Income          Paid by        State
 57.8                                           Claimant      Refund
 57.9   ~~$~~     ~~0 to 3,099~~     ~~1.0 percent~~         ~~5 percent~~    ~~$1,030~~  
 57.10    ~~3,100 to 4,129~~     ~~1.0 percent~~        ~~10 percent~~    ~~$1,030~~  
 57.11    ~~4,130 to 5,159~~     ~~1.1 percent~~        ~~10 percent~~    ~~$1,030~~  
 57.12    ~~5,160 to 7,229~~     ~~1.2 percent~~        ~~10 percent~~    ~~$1,030~~
 57.13    ~~7,230 to 9,289~~     ~~1.3 percent~~        ~~15 percent~~    ~~$1,030~~    
 57.14    ~~9,290 to 10,319~~    ~~1.4 percent~~        ~~15 percent~~    ~~$1,030~~
 57.15   ~~10,320 to 11,349~~    ~~1.4 percent~~        ~~20 percent~~    ~~$1,030~~
 57.16   ~~11,350 to 13,419~~    ~~1.5 percent~~        ~~20 percent~~    ~~$1,030~~
 57.17   ~~13,420 to 14,449~~    ~~1.6 percent~~        ~~20 percent~~    ~~$1,030~~
 57.18   ~~14,450 to 15,479~~    ~~1.7 percent~~        ~~25 percent~~    ~~$1,030~~
 57.19   ~~15,480 to 17,549~~    ~~1.8 percent~~        ~~25 percent~~    ~~$1,030~~ 
 57.20   ~~17,550 to 18,579~~    ~~1.9 percent~~        ~~30 percent~~    ~~$1,030~~ 
 57.21   ~~18,580 to 19,609~~    ~~2.0 percent~~        ~~30 percent~~    ~~$1,030~~  
 57.22   ~~19,610 to 20,639~~    ~~2.2 percent~~        ~~30 percent~~    ~~$1,030~~
 57.23   ~~20,640 to 21,669~~    ~~2.4 percent~~        ~~30 percent~~    ~~$1,030~~
 57.24   ~~21,670 to 22,709~~    ~~2.6 percent~~        ~~35 percent~~    ~~$1,030~~
 57.25   ~~22,710 to 23,739~~    ~~2.7 percent~~        ~~35 percent~~    ~~$1,030~~
 57.26   ~~23,740 to 24,769~~    ~~2.8 percent~~        ~~35 percent~~    ~~$1,030~~
 57.27   ~~24,770 to 25,799~~    ~~2.9 percent~~        ~~40 percent~~    ~~$1,030~~ 
 57.28   ~~25,800 to 26,839~~    ~~3.0 percent~~        ~~40 percent~~    ~~$1,030~~  
 57.29   ~~26,840 to 27,869~~    ~~3.1 percent~~        ~~40 percent~~    ~~$1,030~~  
 57.30   ~~27,870 to 28,899~~    ~~3.2 percent~~        ~~40 percent~~    ~~$1,030~~
 57.31   ~~28,900 to 29,929~~    ~~3.3 percent~~        ~~45 percent~~    ~~$~~  ~~930~~
 57.32   ~~29,930 to 30,959~~    ~~3.4 percent~~        ~~45 percent~~    ~~$~~  ~~830~~
 57.33   ~~30,960 to 31,999~~    ~~3.5 percent~~        ~~45 percent~~    ~~$~~  ~~720~~
 57.34   ~~32,000 to 33,029~~    ~~3.5 percent~~        ~~50 percent~~    ~~$~~  ~~620~~
 57.35   ~~33,030 to 34,059~~    ~~3.5 percent~~        ~~50 percent~~    ~~$~~  ~~520~~  
 57.36   ~~34,060 to 35,089~~    ~~3.5 percent~~        ~~50 percent~~    ~~$~~  ~~310~~  
 57.37   ~~35,090 to 36,119~~    ~~3.5 percent~~        ~~50 percent~~    ~~$~~  ~~100~~
 57.38       $0 to 3,189     1.0 percent         5 percent    $2,000  
 57.39    3,190 to 4,249     1.0 percent        10 percent    $2,000  
 57.40    4,250 to 6,369     1.1 percent        10 percent    $2,000  
 57.41    6,370 to 7,439     1.2 percent        10 percent    $2,000
 57.42    7,440 to 9,549     1.3 percent        10 percent    $2,000    
 57.43    9,550 to 10,609    1.4 percent        10 percent    $2,000
 57.44   10,610 to 11,669    1.4 percent        10 percent    $2,000
 57.45   11,670 to 13,799    1.5 percent        10 percent    $2,000
 57.46   13,800 to 14,859    1.6 percent        10 percent    $2,000
 57.47   14,860 to 15,919    1.7 percent        10 percent    $2,000
 57.48   15,920 to 18,049    1.8 percent        10 percent    $2,000 
 57.49   18,050 to 19,109    1.9 percent        10 percent    $2,000 
 57.50   19,110 to 20,169    2.0 percent        10 percent    $2,000  
 57.51   20,170 to 21,229    2.2 percent        15 percent    $2,000
 57.52   21,230 to 22,289    2.4 percent        15 percent    $2,000
 57.53   22,290 to 23,359    2.6 percent        15 percent    $2,000
 57.54   23,360 to 24,419    2.7 percent        15 percent    $2,000
 57.55   24,420 to 25,469    2.8 percent        15 percent    $2,000
 57.56   25,470 to 26,529    2.9 percent        20 percent    $2,000 
 57.57   25,530 to 27,599    3.0 percent        20 percent    $2,000  
 57.58   27,600 to 28,659    3.1 percent        20 percent    $2,000  
 57.59   28,660 to 29,719    3.2 percent        20 percent    $2,000
 57.60   27,720 to 30,779    3.3 percent        25 percent    $1,920
 57.61   30,780 to 31,839    3.4 percent        25 percent    $1,700
 57.62   31,840 to 32,909    3.5 percent        25 percent    $1,480
 57.63   32,910 to 33,969    3.5 percent        30 percent    $1,280
 57.64   33,970 to 35,029    3.5 percent        30 percent    $1,080  
 57.65   35,030 to 37,149    3.5 percent        30 percent    $  640  
 57.66   36,090 to 39,999    3.5 percent        30 percent    $  200
 58.1      The payment made to a claimant is the amount of the state 
 58.2   refund calculated under this subdivision.  No payment is allowed 
 58.3   if the claimant's household income is ~~$36,120~~ $40,000 or more. 
 58.4      Sec. 7.  Minnesota Statutes 1994, section 290A.04, is 
 58.5   amended by adding a subdivision to read: 
 58.6      Subd. 2j.  [FARM HOMESTEADS.] A claimant whose property 
 58.7   taxes payable relate to a farm homestead and are in excess of 
 58.8   the percentage of the household income stated in this 
 58.9   subdivision shall pay an amount equal to the percent of income 
 58.10  shown for the appropriate household income level along with the 
 58.11  percent to be paid by the claimant of the remaining amount of 
 58.12  property taxes payable.  The state refund equals the amount of 
 58.13  property taxes payable that remain, up to the state refund 
 58.14  amount shown in this subdivision. 
 58.15  Household Income      Percent           Percent    Maximum
 58.16                       of Income          Paid by     State
 58.17                                          Claimant    Refund
 58.18      $0 to 1,059     1.2 percent        18 percent   $500
 58.19   1,060 to 2,119     1.3 percent        18 percent   $500
 58.20   2,120 to 3,188     1.4 percent        20 percent   $500
 58.21   3,189 to 4,247     1.6 percent        20 percent   $500
 58.22   4,248 to 5,307     1.7 percent        20 percent   $500
 58.23   5,308 to 7,435     1.9 percent        25 percent   $500
 58.24   7,436 to 8,495     2.1 percent        25 percent   $500
 58.25   8,496 to 9,554     2.2 percent        25 percent   $500
 58.26   9,555 to 10,613    2.3 percent        30 percent   $500
 58.27  10,614 to 11,673    2.4 percent        30 percent   $500
 58.28  11,674 to 12,742    2.5 percent        30 percent   $500
 58.29  12,743 to 14,861    2.6 percent        30 percent   $500
 58.30  14,862 to 15,920    2.8 percent        35 percent   $500
 58.31  15,921 to 16,979    3.0 percent        35 percent   $500
 58.32  16,980 to 18,049    3.2 percent        40 percent   $500
 58.33  18,050 to 22,286    3.3 percent        40 percent   $500
 58.34  22,287 to 25,474    3.4 percent        45 percent   $500
 58.35  25,475 to 31,840    3.5 percent        45 percent   $500
 58.36  31,841 to 37,147    3.5 percent        45 percent   $500
 58.37  37,148 to 42,453    3.7 percent        50 percent   $500
 58.38  42,454 to 60,502    4.0 percent        50 percent   $500
 58.39  60,503 to 61,561    4.0 percent        50 percent   $400
 58.40  61,562 to 62,621    4.0 percent        50 percent   $300
 58.41  62,622 to 63,689    4.0 percent        50 percent   $100
 58.42     The payment made to a claimant shall be the amount of the 
 58.43  state refund calculated under this subdivision.  No payment is 
 58.44  allowed if the claimant's household income is $63,690 or more. 
 58.45     Sec. 8.  Minnesota Statutes 1995 Supplement, section 
 58.46  290A.04, subdivision 6, is amended to read: 
 58.47     Subd. 6.  [INFLATION ADJUSTMENT.] Beginning for property 
 58.48  tax refunds payable in calendar year ~~1996~~ 1998, the commissioner 
 59.1   shall annually adjust the dollar amounts of the income 
 59.2   thresholds and the maximum refunds under subdivisions 2 ~~and~~, 2a, 
 59.3   and 2j for inflation.  The commissioner shall make the inflation 
 59.4   adjustments in accordance with section 290.06, subdivision 2d, 
 59.5   except that for purposes of this subdivision the percentage 
 59.6   increase shall be determined from the year ending on August 31, 
 59.7   ~~1994~~ 1996, to the year ending on August 31 of the year preceding 
 59.8   that in which the refund is payable.  The commissioner shall use 
 59.9   the appropriate percentage increase to annually adjust the 
 59.10  income thresholds and maximum refunds under subdivisions 2 ~~and~~, 
 59.11  2a, and 2j for inflation without regard to whether or not the 
 59.12  income tax brackets are adjusted for inflation in that year.  
 59.13  The commissioner shall round the thresholds and the maximum 
 59.14  amounts, as adjusted to the nearest $10 amount.  If the amount 
 59.15  ends in $5, the commissioner shall round it up to the next $10 
 59.16  amount.  
 59.17     The commissioner shall annually announce the adjusted 
 59.18  refund schedule at the same time provided under section 290.06.  
 59.19  The determination of the commissioner under this subdivision is 
 59.20  not a rule under the administrative procedure act. 
 59.21     Sec. 9.  [EFFECTIVE DATE.] 
 59.22     (a) The provisions of this article take effect as provided 
 59.23  in paragraph (b) only if the constitutional amendment proposed 
 59.24  to the people by article 1, section 1, is adopted in the 1996 
 59.25  general election. 
 59.26     (b) Sections 1 to 8 are effective for refunds claimed for 
 59.27  property taxes payable in 1997 and thereafter. 
 59.28                             ARTICLE 6
 59.29                             SALES TAX
 59.30     Section 1.  [290.0692] [REFUNDABLE SALES TAX CREDIT.] 
 59.31     Subdivision 1.  [CREDIT ALLOWED.] For each taxable year, an 
 59.32  individual may claim a credit against the tax imposed by this 
 59.33  chapter equal to $25 multiplied by each exemption for the 
 59.34  taxpayer, spouse, and each dependent of the taxpayer.  The 
 59.35  maximum allowable credit is $150.  For married individuals 
 59.36  filing separately, the maximum allowable credit is $75. 
 60.1      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 60.2   the following terms have the meanings given. 
 60.3      (b) "Exemption" means an exemption allowed under section 
 60.4   151 of the Internal Revenue Code. 
 60.5      (c) "Income" means income as defined in section 290.067, 
 60.6   subdivision 2a. 
 60.7      (d) "Taxpayer" excludes one who is claimed as a dependent 
 60.8   on another's federal income tax return or who would qualify to 
 60.9   be claimed as a dependent on the tax return of another, 
 60.10  regardless of whether a return was filed. 
 60.11     Subd. 3.  [INCOME PHASE-OUT.] The amount of the credit is 
 60.12  reduced by five percentage points for each $500 or part of $500 
 60.13  of income above $15,000.  No credit is allowed if income exceeds 
 60.14  $25,000. 
 60.15     Subd. 4.  [CREDIT REFUNDABLE.] If the amount of the credit 
 60.16  exceeds the taxpayer's liability under this chapter, the 
 60.17  commissioner shall refund the excess to the taxpayer. 
 60.18     Subd. 5.  [INFLATION ADJUSTMENT.] The commissioner shall 
 60.19  adjust the dollar amounts in subdivisions 1 and 3 for inflation, 
 60.20  using the percentage determined under section 290.06, 
 60.21  subdivision 2d, for the taxable year. 
 60.22     Subd. 6.  [APPROPRIATION.] An amount sufficient to pay 
 60.23  refunds under this section is appropriated to the commissioner. 
 60.24     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 60.25  297A.01, subdivision 3, is amended to read: 
 60.26     Subd. 3.  A "sale" and a "purchase" includes, but is not 
 60.27  limited to, each of the following transactions: 
 60.28     (a) Any transfer of title or possession, or both, of 
 60.29  tangible personal property, whether absolutely or conditionally, 
 60.30  and the leasing of or the granting of a license to use or 
 60.31  consume tangible personal property other than manufactured homes 
 60.32  used for residential purposes for a continuous period of 30 days 
 60.33  or more, for a consideration in money or by exchange or barter; 
 60.34     (b) The production, fabrication, printing, or processing of 
 60.35  tangible personal property for a consideration for consumers who 
 60.36  furnish either directly or indirectly the materials used in the 
 61.1   production, fabrication, printing, or processing; and 
 61.2      (c) ~~The furnishing, preparing, or serving for a~~ 
 61.3   ~~consideration of food, meals, or drinks.  "Sale" does not~~ 
 61.4   ~~include:~~ 
 61.5      ~~(1) meals or drinks served to patients, inmates, or persons~~ 
 61.6   ~~residing at hospitals, sanitariums, nursing homes, senior~~ 
 61.7   ~~citizens homes, and correctional, detention, and detoxification~~ 
 61.8   ~~facilities;~~ 
 61.9      ~~(2) meals or drinks purchased for and served exclusively to~~ 
 61.10  ~~individuals who are 60 years of age or over and their spouses or~~ 
 61.11  ~~to the handicapped and their spouses by governmental agencies,~~ 
 61.12  ~~nonprofit organizations, agencies, or churches or pursuant to~~ 
 61.13  ~~any program funded in whole or part through 42 USCA sections~~ 
 61.14  ~~3001 through 3045, wherever delivered, prepared or served; or~~ 
 61.15     ~~(3) meals and lunches served at public and private schools,~~ 
 61.16  ~~universities, or colleges.~~ 
 61.17  ~~Notwithstanding section 297A.25, subdivision 2, taxable food or~~ 
 61.18  ~~meals include, but are not limited to, the following:~~  
 61.19     ~~(i) heated food or drinks;~~ 
 61.20     ~~(ii) sandwiches prepared by the retailer;~~ 
 61.21     ~~(iii) single sales of prepackaged ice cream or ice milk~~ 
 61.22  ~~novelties prepared by the retailer;~~ 
 61.23     ~~(iv) hand-prepared or dispensed ice cream or ice milk~~ 
 61.24  ~~products including cones, sundaes, and snow cones;~~ 
 61.25     ~~(v) soft drinks and other beverages prepared or served by~~ 
 61.26  ~~the retailer;~~ 
 61.27     ~~(vi) gum;~~ 
 61.28     ~~(vii) ice;~~ 
 61.29     ~~(viii) all food sold in vending machines;~~ 
 61.30     ~~(ix) party trays prepared by the retailers; and~~ 
 61.31     ~~(x) all meals and single servings of packaged snack food,~~ 
 61.32  ~~single cans or bottles of pop, sold in restaurants and bars;~~ 
 61.33     ~~(d) The granting of the privilege of admission to places of~~ 
 61.34  ~~amusement, recreational areas, or athletic events, except a~~ 
 61.35  ~~world championship football game sponsored by the national~~ 
 61.36  ~~football league, and the privilege of having access to and the~~ 
 62.1   ~~use of amusement devices, tanning facilities, reducing salons,~~ 
 62.2   ~~steam baths, turkish baths, health clubs, and spas or athletic~~ 
 62.3   ~~facilities;~~ 
 62.4      ~~(e) The furnishing for a consideration of lodging and~~ 
 62.5   ~~related services by a hotel, rooming house, tourist court, motel~~ 
 62.6   ~~or trailer camp and of the granting of any similar license to~~ 
 62.7   ~~use real property other than the renting or leasing thereof for~~ 
 62.8   ~~a continuous period of 30 days or more;~~ 
 62.9      ~~(f) The furnishing for a consideration of electricity, gas,~~ 
 62.10  ~~water, or steam for use or consumption within this state, or~~ 
 62.11  ~~local exchange telephone service, intrastate toll service, and~~ 
 62.12  ~~interstate toll service, if that service originates from and is~~ 
 62.13  ~~charged to a telephone located in this state.  Telephone service~~ 
 62.14  ~~includes paging services and private communication service, as~~ 
 62.15  ~~defined in United States Code, title 26, section 4252(d), except~~ 
 62.16  ~~for private communication service purchased by an agent acting~~ 
 62.17  ~~on behalf of the state lottery.  The furnishing for a~~ 
 62.18  ~~consideration of access to telephone services by a hotel to its~~ 
 62.19  ~~guests is a sale under this clause.  Sales by municipal~~ 
 62.20  ~~corporations in a proprietary capacity are included in the~~ 
 62.21  ~~provisions of this clause.  The furnishing of water and sewer~~ 
 62.22  ~~services for residential use shall not be considered a sale.~~  
 62.23  ~~The sale of natural gas to be used as a fuel in vehicles~~ 
 62.24  ~~propelled by natural gas shall not be considered a sale for the~~ 
 62.25  ~~purposes of this section;~~ 
 62.26     ~~(g) The furnishing for a consideration of cable television~~ 
 62.27  ~~services, including charges for basic service, charges for~~ 
 62.28  ~~premium service, and any other charges for any other~~ 
 62.29  ~~pay-per-view, monthly, or similar television services;~~ 
 62.30     ~~(h) The furnishing for a consideration of parking services,~~ 
 62.31  ~~whether on a contractual, hourly, or other periodic basis,~~ 
 62.32  ~~except for parking at a meter;~~ 
 62.33     ~~(i) The furnishing for a consideration of services listed~~ 
 62.34  ~~in this paragraph:~~ 
 62.35     ~~(i) laundry and dry cleaning services including cleaning,~~ 
 62.36  ~~pressing, repairing, altering, and storing clothes, linen~~ 
 63.1   ~~services and supply, cleaning and blocking hats, and carpet,~~ 
 63.2   ~~drapery, upholstery, and industrial cleaning.  Laundry and dry~~ 
 63.3   ~~cleaning services do not include services provided by coin~~ 
 63.4   ~~operated facilities operated by the customer;~~ 
 63.5      ~~(ii) motor vehicle washing, waxing, and cleaning services,~~ 
 63.6   ~~including services provided by coin-operated facilities operated~~ 
 63.7   ~~by the customer, and rustproofing, undercoating, and towing of~~ 
 63.8   ~~motor vehicles;~~ 
 63.9      ~~(iii) building and residential cleaning, maintenance, and~~ 
 63.10  ~~disinfecting and exterminating services;~~ 
 63.11     ~~(iv) detective services, security services, burglar, fire~~ 
 63.12  ~~alarm, and armored car services not including services performed~~ 
 63.13  ~~within the jurisdiction they serve by off-duty licensed peace~~ 
 63.14  ~~officers as defined in section 626.84, subdivision 1;~~ 
 63.15     ~~(v) pet grooming services;~~ 
 63.16     ~~(vi) lawn care, fertilizing, mowing, spraying and sprigging~~ 
 63.17  ~~services; garden planting and maintenance; tree, bush, and shrub~~ 
 63.18  ~~pruning, bracing, spraying, and surgery; tree, bush, shrub and~~ 
 63.19  ~~stump removal; and tree trimming for public utility lines.~~  
 63.20  ~~Services performed under a construction contract for the~~ 
 63.21  ~~installation of shrubbery, plants, sod, trees, bushes, and~~ 
 63.22  ~~similar items are not taxable;~~ 
 63.23     ~~(vii) mixed municipal solid waste management services as~~ 
 63.24  ~~described in section 297A.45;~~ 
 63.25     ~~(viii) massages, except when provided by a licensed health~~ 
 63.26  ~~care facility or professional or upon written referral from a~~ 
 63.27  ~~licensed health care facility or professional for treatment of~~ 
 63.28  ~~illness, injury, or disease; and~~ 
 63.29     ~~(ix) the furnishing for consideration of lodging, board and~~ 
 63.30  ~~care services for animals in kennels and other similar~~ 
 63.31  ~~arrangements, but excluding veterinary and horse boarding~~ 
 63.32  ~~services.~~ 
 63.33  ~~The services listed in this paragraph are taxable under section~~ 
 63.34  ~~297A.02 if the service is performed wholly within Minnesota or~~ 
 63.35  ~~if the service is performed partly within and partly without~~ 
 63.36  ~~Minnesota and the greater proportion of the service is performed~~ 
 64.1   ~~in Minnesota, based on the cost of performance.  In applying the~~ 
 64.2   ~~provisions of this chapter, the terms "tangible personal~~ 
 64.3   ~~property" and "sales at retail" include taxable services and the~~ 
 64.4   ~~provision of taxable services, unless specifically provided~~ 
 64.5   ~~otherwise.  Services performed by an employee for an employer~~ 
 64.6   ~~are not taxable under this paragraph.  Services performed by a~~ 
 64.7   ~~partnership or association for another partnership or~~ 
 64.8   ~~association are not taxable under this paragraph if one of the~~ 
 64.9   ~~entities owns or controls more than 80 percent of the voting~~ 
 64.10  ~~power of the equity interest in the other entity.  Services~~ 
 64.11  ~~performed between members of an affiliated group of corporations~~ 
 64.12  ~~are not taxable.  For purposes of this section, "affiliated~~ 
 64.13  ~~group of corporations" includes those entities that would be~~ 
 64.14  ~~classified as a member of an affiliated group under United~~ 
 64.15  ~~States Code, title 26, section 1504, and who are eligible to~~ 
 64.16  ~~file a consolidated tax return for federal income tax purposes;~~ 
 64.17     ~~(j)~~ A "sale" and a "purchase" includes the transfer of 
 64.18  computer software, meaning information and directions that 
 64.19  dictate the function performed by data processing equipment.  A 
 64.20  "sale" and a "purchase" does not include the design, 
 64.21  development, writing, translation, fabrication, lease, or 
 64.22  transfer for a consideration of title or possession of a custom 
 64.23  computer program~~; and~~. 
 64.24     ~~(k) The granting of membership in a club, association, or~~ 
 64.25  ~~other organization if:~~ 
 64.26     ~~(1) the club, association, or other organization makes~~ 
 64.27  ~~available for the use of its members sports and athletic~~ 
 64.28  ~~facilities (without regard to whether a separate charge is~~ 
 64.29  ~~assessed for use of the facilities); and~~ 
 64.30     ~~(2) use of the sports and athletic facilities is not made~~ 
 64.31  ~~available to the general public on the same basis as it is made~~ 
 64.32  ~~available to members.~~  
 64.33  ~~Granting of membership includes both one-time initiation fees~~ 
 64.34  ~~and periodic membership dues.  Sports and athletic facilities~~ 
 64.35  ~~include golf courses, tennis, racquetball, handball and squash~~ 
 64.36  ~~courts, basketball and volleyball facilities, running tracks,~~ 
 65.1   ~~exercise equipment, swimming pools, and other similar athletic~~ 
 65.2   ~~or sports facilities.  The provisions of this paragraph do not~~ 
 65.3   ~~apply to camps or other recreation facilities owned and operated~~ 
 65.4   ~~by an exempt organization under section 501(c)(3) of the~~ 
 65.5   ~~Internal Revenue Code of 1986, as amended through December 31,~~ 
 65.6   ~~1992, for educational and social activities for young people~~ 
 65.7   ~~primarily age 18 and under.~~  
 65.8      Sec. 3.  Minnesota Statutes 1994, section 297A.01, 
 65.9   subdivision 16, is amended to read: 
 65.10     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
 65.11  machinery and equipment purchased or leased for use in this 
 65.12  state and used by the purchaser or lessee primarily for 
 65.13  manufacturing, fabricating, mining, or refining tangible 
 65.14  personal property to be sold ultimately at retail and for 
 65.15  electronically transmitting results retrieved by a customer of 
 65.16  an on-line computerized data retrieval system.  
 65.17     (b) Capital equipment includes all machinery and equipment 
 65.18  that is essential to the integrated production process.  Capital 
 65.19  equipment includes, but is not limited to: 
 65.20     (1) machinery and equipment used or required to operate, 
 65.21  control, or regulate the production equipment; 
 65.22     (2) machinery and equipment used for research and 
 65.23  development, design, quality control, and testing activities; 
 65.24     (3) environmental control devices that are used to maintain 
 65.25  conditions such as temperature, humidity, light, or air pressure 
 65.26  when those conditions are essential to and are part of the 
 65.27  production process; ~~or~~ 
 65.28     (4) materials and supplies necessary to construct and 
 65.29  install machinery or equipment; or 
 65.30     (5) pollution control equipment. 
 65.31     (c) Capital equipment does not include the following: 
 65.32     (1) ~~repair or replacement parts, including accessories,~~ 
 65.33  ~~whether purchased as spare parts, repair parts, or as upgrades~~ 
 65.34  ~~or modifications, and whether purchased before or after the~~ 
 65.35  ~~machinery or equipment is placed into service.  Parts or~~ 
 65.36  ~~accessories are treated as capital equipment only to the extent~~ 
 66.1   ~~that they are a part of and are essential to the operation of~~ 
 66.2   ~~the machinery or equipment as initially purchased;~~ 
 66.3      ~~(2)~~ motor vehicles taxed under chapter 297B; 
 66.4      ~~(3)~~ (2) machinery or equipment used to receive or store raw 
 66.5   materials; 
 66.6      ~~(4)~~ (3) building materials; 
 66.7      ~~(5)~~ (4) machinery or equipment used for nonproduction 
 66.8   purposes, including, but not limited to, the following:  
 66.9   machinery and equipment used for plant security, fire 
 66.10  prevention, first aid, and hospital stations; machinery and 
 66.11  equipment used in support operations or for administrative 
 66.12  purposes; machinery and equipment used solely for pollution 
 66.13  control, prevention, or abatement; and machinery and equipment 
 66.14  used in plant cleaning, disposal of scrap and waste, plant 
 66.15  communications, space heating, lighting, or safety; or 
 66.16     ~~(6) "farm machinery" as defined by subdivision 15,~~ 
 66.17  ~~"aquaculture production equipment" as defined by subdivision 19,~~ 
 66.18  ~~and "replacement capital equipment" as defined by subdivision~~ 
 66.19  ~~20; or~~ 
 66.20     ~~(7)~~ (5) any other item that is not essential to the 
 66.21  integrated process of manufacturing, fabricating, mining, or 
 66.22  refining. 
 66.23     (d) For purposes of this subdivision: 
 66.24     (1) "Equipment" means independent devices or tools separate 
 66.25  from machinery but essential to an integrated production 
 66.26  process, including computers and software, used in operating 
 66.27  machinery and equipment; and any subunit or assembly comprising 
 66.28  a component of any machinery or accessory or attachment parts of 
 66.29  machinery, such as tools, dies, jigs, patterns, and molds. 
 66.30     (2) "Fabricating" means to make, build, create, produce, or 
 66.31  assemble components or property to work in a new or different 
 66.32  manner. 
 66.33     (3) "Machinery" means mechanical, electronic, or electrical 
 66.34  devices, including computers and software, that are purchased or 
 66.35  constructed to be used for the activities set forth in paragraph 
 66.36  (a), beginning with the removal of raw materials from inventory 
 67.1   through the completion of the product, including packaging of 
 67.2   the product. 
 67.3      (4) "Manufacturing" means an operation or series of 
 67.4   operations where raw materials are changed in form, composition, 
 67.5   or condition by machinery and equipment and which results in the 
 67.6   production of a new article of tangible personal property.  For 
 67.7   purposes of this subdivision, "manufacturing" includes the 
 67.8   generation of electricity or steam to be sold at retail. 
 67.9      (5) "Mining" means the extraction of minerals, ores, stone, 
 67.10  and peat. 
 67.11     (6) "On-line data retrieval system" means a system whose 
 67.12  cumulation of information is equally available and accessible to 
 67.13  all its customers. 
 67.14     (7) "Pollution control equipment" means machinery and 
 67.15  equipment used to eliminate, prevent, or reduce pollution 
 67.16  resulting from an activity described in paragraph (a). 
 67.17     (8) "Primarily" means machinery and equipment used 50 
 67.18  percent or more of the time in an activity described in 
 67.19  paragraph (a). 
 67.20     (9) "Refining" means the process of converting a natural 
 67.21  resource to a product, including the treatment of water to be 
 67.22  sold at retail. 
 67.23     ~~(e) For purposes of this subdivision the requirement that~~ 
 67.24  ~~the machinery or equipment "must be used by the purchaser or~~ 
 67.25  ~~lessee" means that the person who purchases or leases the~~ 
 67.26  ~~machinery or equipment must be the one who uses it for the~~ 
 67.27  ~~qualifying purpose.  When a contractor buys and installs~~ 
 67.28  ~~machinery or equipment as part of an improvement to real~~ 
 67.29  ~~property, only the contractor is considered the purchaser.~~ 
 67.30     ~~(f) Notwithstanding prior provisions of this subdivision,~~ 
 67.31  ~~machinery and equipment purchased or leased to replace machinery~~ 
 67.32  ~~and equipment used in the mining or production of taconite shall~~ 
 67.33  ~~qualify as capital equipment.~~ 
 67.34     Sec. 4.  [297A.136] [TAXABLE SERVICES.] 
 67.35     Subdivision 1.  [TAXABLE.] Provisions of services for 
 67.36  consideration is subject to tax under this chapter as provided 
 68.1   by this section. 
 68.2      Subd. 2.  [MEALS AND PREPARED FOODS.] (a) The furnishing, 
 68.3   preparing, or serving of food, meals, or drinks are taxable.  
 68.4   Notwithstanding section 297A.25, subdivision 2, this 
 68.5   specifically includes, but is not limited to, the following: 
 68.6      (1) heated food or drinks; 
 68.7      (2) sandwiches prepared by the retailer; 
 68.8      (3) single sales of prepackaged ice cream or ice milk 
 68.9   novelties prepared by the retailer; 
 68.10     (4) hand-prepared or dispensed ice cream or ice milk 
 68.11  products including cones, sundaes, and snow cones; 
 68.12     (5) soft drinks and other beverages prepared or served by 
 68.13  the retailer; 
 68.14     (6) gum; 
 68.15     (7) ice; 
 68.16     (8) all food sold in vending machines; 
 68.17     (9) party trays prepared by the retailers; and 
 68.18     (10) all meals and single servings of packaged snack food, 
 68.19  single cans or bottles of pop, sold in restaurants and bars. 
 68.20     (b) The following prepared meals, foods, and drinks are 
 68.21  exempt: 
 68.22     (1) meals or drinks served to patients, inmates, or persons 
 68.23  residing at hospitals, sanitariums, nursing homes, senior 
 68.24  citizens homes, and correctional, detention, and detoxification 
 68.25  facilities; 
 68.26     (2) meals or drinks purchased for and served exclusively to 
 68.27  individuals who are 60 years of age or over and their spouses or 
 68.28  to the handicapped and their spouses by governmental agencies, 
 68.29  nonprofit organizations, agencies, or churches, or pursuant to 
 68.30  any program funded in whole or part through United States Code 
 68.31  Annotated, title 42, sections 3001 through 3045, wherever 
 68.32  delivered, prepared, or served; or 
 68.33     (3) meals and lunches served at public and private schools, 
 68.34  universities, or colleges. 
 68.35     Subd. 3.  [ADMISSIONS.] The granting of the privilege of 
 68.36  admission to places of amusement, recreational areas, or 
 69.1   athletic events, except a world championship football game 
 69.2   sponsored by the national football league, and the privilege of 
 69.3   having access to and the use of amusement devices, tanning 
 69.4   facilities, reducing salons, steam baths, turkish baths, health 
 69.5   clubs, and spas or athletic facilities is taxable. 
 69.6      Subd. 4.  [LODGING.] Lodging and related services furnished 
 69.7   by a hotel, rooming house, tourist court, motel, or trailer camp 
 69.8   and the granting of any similar license to use real property 
 69.9   other than the renting or leasing thereof for a continuous 
 69.10  period of 30 days or more are taxable. 
 69.11     Subd. 5.  [UTILITY SERVICES.] (a) The furnishing for use or 
 69.12  consumption in this state of the following utility services is 
 69.13  taxable: 
 69.14     (1) electricity; 
 69.15     (2) gas; 
 69.16     (3) water; 
 69.17     (4) steam; 
 69.18     (5) sewer services; and 
 69.19     (6) telephone service, including: 
 69.20     (i) local exchange telephone service; 
 69.21     (ii) intrastate toll service; 
 69.22     (iii) interstate toll service if that service originates 
 69.23  from and is charged to a telephone located in this state; 
 69.24     (iv) paging services and private communications service, as 
 69.25  defined in United States Code, title 26, section 4252(d), except 
 69.26  private communication service purchased by an agent acting on 
 69.27  behalf of the state lottery; and 
 69.28     (v) furnishing of access to telephone services by a hotel 
 69.29  to its guests. 
 69.30     (b) Sales of the services listed in this subdivision by 
 69.31  municipal corporations in a proprietary capacity are taxable. 
 69.32     (c) The sale of natural gas to be used as a fuel in 
 69.33  vehicles propelled by natural gas is exempt. 
 69.34     Subd. 6.  [CABLE TELEVISION SERVICES.] The furnishing of 
 69.35  cable television services, including charges for basic service, 
 69.36  charges for premium service, and any other charges for any other 
 70.1   pay-per-view, monthly, or similar television services is taxable.
 70.2      Subd. 7.  [PARKING SERVICES.] The furnishing of parking 
 70.3   services, whether on a contractual, hourly, or other periodic 
 70.4   basis, except for parking at a meter, is taxable. 
 70.5      Subd. 8.  [SPORTS AND HEALTH CLUB MEMBERSHIPS.] (a) The 
 70.6   granting of membership in a club, association, or other 
 70.7   organization is taxable if: 
 70.8      (1) the club, association, or other organization makes 
 70.9   available for the use of its members sports and athletic 
 70.10  facilities (without regard to whether a separate charge is 
 70.11  assessed for use of the facilities); and 
 70.12     (2) use of the sports and athletic facilities is not made 
 70.13  available to the general public on the same basis as it is made 
 70.14  available to members.  Granting of membership includes both 
 70.15  one-time initiation fees and periodic membership dues.  Sports 
 70.16  and athletic facilities include golf courses, tennis, 
 70.17  racquetball, handball and squash courts, basketball and 
 70.18  volleyball facilities, running tracks, exercise equipment, 
 70.19  swimming pools, and other similar athletic or sports facilities. 
 70.20     (b) The provisions of this subdivision do not apply to 
 70.21  camps or other recreation facilities owned and operated by an 
 70.22  exempt organization under section 501(c)(3) of the Internal 
 70.23  Revenue Code of 1986, as amended through December 31, 1995, for 
 70.24  educational and social activities for young people primarily age 
 70.25  18 and under. 
 70.26     Subd. 9.  [LAUNDRY AND DRY CLEANING.] (a) The furnishing of 
 70.27  laundry and dry cleaning services is taxable.  These services 
 70.28  include cleaning, pressing, repairing, altering, and storing 
 70.29  clothes, linen services and supply, cleaning and blocking hats, 
 70.30  and carpet, drapery, upholstery, and industrial cleaning. 
 70.31     (b) Laundry and dry cleaning services do not include 
 70.32  services provided by coin-operated facilities operated by the 
 70.33  customer. 
 70.34     Subd. 10.  [MOTOR VEHICLE SERVICES.] The furnishing of 
 70.35  repair, rustproofing, undercoating, towing, washing, waxing, and 
 70.36  cleaning services for motor vehicles is taxable.  Washing, 
 71.1   waxing, and cleaning services include those provided by 
 71.2   coin-operated facilities operated by a customer. 
 71.3      Subd. 11.  [BUILDING CLEANING SERVICES.] The furnishing of 
 71.4   building and residential cleaning, maintenance, and disinfecting 
 71.5   and exterminating services is taxable. 
 71.6      Subd. 12.  [DETECTIVE AND SECURITY SERVICES.] (a) The 
 71.7   furnishing of detective services, security services, burglar, 
 71.8   fire alarm, and armored car services is taxable. 
 71.9      (b) Services under paragraph (a) that are provided by an 
 71.10  off-duty licensed peace officer, as defined in section 626.84, 
 71.11  subdivision 1, are exempt, if they are provided in the 
 71.12  jurisdiction in which the officer serves. 
 71.13     Subd. 13.  [PET GROOMING SERVICES.] The furnishing of pet 
 71.14  grooming services is taxable. 
 71.15     Subd. 14.  [LAWN AND GARDEN SERVICES.] (a) The furnishing 
 71.16  of the following lawn and garden services is taxable: 
 71.17     (1) lawn care, fertilizing, mowing, spraying, and sprigging 
 71.18  services; 
 71.19     (2) garden planting and maintenance; 
 71.20     (3) tree, bush, and shrub pruning, bracing, spraying, and 
 71.21  surgery; 
 71.22     (4) tree, bush, shrub, and stump removal; and 
 71.23     (5) tree trimming for public utility lines. 
 71.24     (b) Services performed under a construction contract for 
 71.25  the installation of shrubbery, plants, sod, trees, bushes, and 
 71.26  similar items are exempt. 
 71.27     Subd. 15.  [SOLID WASTE SERVICES.] The furnishing of mixed 
 71.28  municipal solid waste management services as described in 
 71.29  section 297A.45 is taxable. 
 71.30     Subd. 16.  [MASSAGE SERVICES.] (a) The furnishing of 
 71.31  massages is taxable. 
 71.32     (b) Massages provided by a licensed health care facility or 
 71.33  professional or upon written referral from a licensed health 
 71.34  care facility or professional for treatment of illness, injury, 
 71.35  or disease are exempt. 
 71.36     Subd. 17.  [ANIMAL BOARDING SERVICES.] (a) The furnishing 
 72.1   of lodging, board, and care services for animals in kennels and 
 72.2   other similar arrangements is taxable. 
 72.3      (b) Veterinary and horse boarding services are exempt. 
 72.4      Subd. 18.  [REPAIR SERVICES.] The repair of tangible 
 72.5   personal property is taxable. 
 72.6      Subd. 19.  [FUNERAL SERVICES.] The furnishing of funeral 
 72.7   services, including embalming, cremation, or other preparation 
 72.8   of dead human bodies for disposition, and other services 
 72.9   provided by funeral directors or licensed practitioners of 
 72.10  mortuary science is taxable. 
 72.11     Subd. 20.  [GENERAL RULES.] (a) The rules in this 
 72.12  subdivision apply to services taxable under subdivisions 9 to 18.
 72.13     (b) The services listed are taxable under section 297A.02 
 72.14  if the service is performed wholly within Minnesota or if the 
 72.15  service is performed partly within and partly without Minnesota 
 72.16  and the greater proportion of the service is performed in 
 72.17  Minnesota, based on the cost of performance. 
 72.18     (c) In applying the provisions of this chapter, the terms 
 72.19  "tangible personal property" and "sales at retail" include 
 72.20  taxable services and the provision of taxable services, unless 
 72.21  specifically provided otherwise. 
 72.22     (d) Services performed by an employee for an employer are 
 72.23  not taxable under this section. 
 72.24     (e) Services performed by a partnership or association for 
 72.25  another partnership or association are not taxable, if one of 
 72.26  the entities owns or controls more than 80 percent of the voting 
 72.27  power of the equity interest in the other entity.  Services 
 72.28  performed between members of an affiliated group of corporations 
 72.29  are not taxable.  For purposes of this section, "affiliated 
 72.30  group of corporations" includes entities that would be 
 72.31  classified as a member of an affiliated group under United 
 72.32  States Code, title 26, section 1504, and that are eligible to 
 72.33  file a consolidated tax return for federal income tax purposes. 
 72.34     Sec. 5.  Minnesota Statutes 1994, section 297A.15, 
 72.35  subdivision 5, is amended to read: 
 72.36     Subd. 5.  [REFUND; APPROPRIATION.] Notwithstanding the 
 73.1   provisions of ~~sections 297A.02, subdivision 5, and~~ section 
 73.2   297A.25, ~~subdivisions 42 and~~ subdivision 50, the tax on sales of 
 73.3   ~~capital equipment, replacement capital equipment, and~~ 
 73.4   construction materials and supplies under section 297A.25, 
 73.5   subdivision 50, shall be imposed and collected as if the rates 
 73.6   under sections 297A.02, subdivision 1, and 297A.021, applied.  
 73.7   Upon application by the purchaser, on forms prescribed by the 
 73.8   commissioner, a refund equal to the reduction in the tax due as 
 73.9   a result of the application of the exemption under section 
 73.10  297A.25, subdivision ~~42 or~~ 50, ~~and the rates under sections~~ 
 73.11  ~~297A.02, subdivision 5, and 297A.021~~ shall be paid to the 
 73.12  purchaser.  ~~In the case of building materials qualifying under~~ 
 73.13  ~~section 297A.25, subdivision 50,~~ Where the tax was paid by a 
 73.14  contractor, application must be made by the owner for the sales 
 73.15  tax paid by all the contractors, subcontractors, and builders 
 73.16  for the project.  The application must include sufficient 
 73.17  information to permit the commissioner to verify the sales tax 
 73.18  paid for the project.  The application shall include information 
 73.19  necessary for the commissioner initially to verify that the 
 73.20  purchases qualified as ~~capital equipment under section 297A.25,~~ 
 73.21  ~~subdivision 42, replacement capital equipment under section~~ 
 73.22  ~~297A.01, subdivision 20, or capital equipment or~~ construction 
 73.23  materials and supplies under section 297A.25, subdivision 50.  
 73.24  No more than two applications for refunds may be filed under 
 73.25  this subdivision in a calendar year.  ~~No owner may apply for a~~ 
 73.26  ~~refund based on the exemption under section 297A.25, subdivision~~ 
 73.27  ~~50, before July 1, 1993.~~  Unless otherwise specifically provided 
 73.28  by this subdivision, the provisions of section 289A.40 apply to 
 73.29  the refunds payable under this subdivision.  There is annually 
 73.30  appropriated to the commissioner of revenue the amount required 
 73.31  to make the refunds. 
 73.32     The amount to be refunded shall bear interest at the rate 
 73.33  in section 270.76 from the date the refund claim is filed with 
 73.34  the commissioner. 
 73.35     Sec. 6.  Minnesota Statutes 1994, section 297A.25, 
 73.36  subdivision 29, is amended to read: 
 74.1      Subd. 29.  [FARM MACHINERY REPAIR PARTS.] The gross 
 74.2   receipts from the sale of farm machinery and repair and 
 74.3   replacement parts, except tires, used for maintenance or repair 
 74.4   of farm machinery are exempt, if the part replaces a farm 
 74.5   machinery part assigned a specific or generic part number by the 
 74.6   manufacturer of the farm machinery.  
 74.7      Sec. 7.  [REVISOR'S INSTRUCTION.] 
 74.8      The revisor of statutes shall, in the 1996 edition of 
 74.9   Minnesota Statutes, substitute cross references to the 
 74.10  appropriate subdivision of section 4 for each reference to a 
 74.11  paragraph of section 297A.01, subdivision 3, that is recodified 
 74.12  in section 4. 
 74.13     Sec. 8.  [REPEALER.] 
 74.14     Minnesota Statutes 1994, sections 297A.01, subdivisions 17 
 74.15  and 20; 297A.02, subdivisions 2 and 5; and 297A.25, subdivisions 
 74.16  8, 17, and 53, are repealed. 
 74.17     Sec. 9.  [EFFECTIVE DATE.] 
 74.18     Section 1 is effective for taxable years beginning after 
 74.19  December 31, 1996, but only if the constitutional amendment 
 74.20  proposed to the people by article 1, section 1, is adopted in 
 74.21  the 1996 general election.  The first inflation adjustment under 
 74.22  section 1, subdivision 6, must be made for the taxable years 
 74.23  beginning after December 31, 1997.  Sections 2 to 8 are 
 74.24  effective for sales made after July 1, 1997, but only if the 
 74.25  constitutional amendment proposed to the people by article 1, 
 74.26  section 1, is adopted in the 1996 general election. 
 74.27                             ARTICLE 7
 74.28                       BUSINESS ACTIVITY TAX
 74.29     Section 1.  Minnesota Statutes 1994, section 290.06, 
 74.30  subdivision 1, is amended to read: 
 74.31     Subdivision 1.  [COMPUTATION, CORPORATIONS.] The franchise 
 74.32  tax imposed upon corporations shall be computed by applying to 
 74.33  their taxable income the rate of ~~9.8~~ 7.5 percent. 
 74.34     Sec. 2.  [290.9401] [BAT IMPOSED.] 
 74.35     In addition to the taxes imposed by this chapter, a tax of 
 74.36  .. percent applies to a firm's tax base. 
 75.1      Sec. 3.  [290.9402] [DEFINITIONS.] 
 75.2      Subdivision 1.  [SCOPE.] For purposes of sections 3 to 8, 
 75.3   the following terms have the meanings given. 
 75.4      Subd. 2.  [BUSINESS ACTIVITY.] "Business activity" means 
 75.5   sale or rental of property or the performance of services in 
 75.6   this state to realize a gain, benefit, or advantage, whether 
 75.7   direct or indirect.  Business activity includes activity in 
 75.8   intrastate, interstate, and foreign commerce.  It does not 
 75.9   include services provided by an employee to the employee's 
 75.10  employer, service as the director of a corporation, or a casual 
 75.11  transaction.  Although an activity may be incidental to another 
 75.12  of the firm's business activities, each activity is a business 
 75.13  activity for purposes of the tax. 
 75.14     Subd. 3.  [BUSINESS INCOME.] "Business income" means net 
 75.15  income.  For a firm other than a corporation, net income is 
 75.16  limited to the portion derived from business activity. 
 75.17     Subd. 4.  [CASUAL TRANSACTION.] "Casual transaction" means 
 75.18  a transaction that (1) is not made in the ordinary course of 
 75.19  repeated or successive transactions of a like character by the 
 75.20  firm, and (2) is not incidental to the firm's regular business 
 75.21  activity. 
 75.22     Subd. 5.  [COMPENSATION.] (a) "Compensation" means all 
 75.23  payments made to or for the benefit of employees, officers, or 
 75.24  directors of the firm. 
 75.25     (b) Compensation specifically includes, but is not limited 
 75.26  to: 
 75.27     (1) wages, salaries, bonuses, commissions, and other 
 75.28  payments to employees, officers, or directors; 
 75.29     (2) payments to state and federal unemployment compensation 
 75.30  funds; 
 75.31     (3) payments, including self-insurance, for workers' 
 75.32  compensation; 
 75.33     (4) payments to individuals not currently working; 
 75.34     (5) payments to dependents and heirs of individuals because 
 75.35  of current or past labor service provided by those individuals; 
 75.36     (6) payments to a pension, retirement, profit-sharing, or 
 76.1   deferred compensation program; 
 76.2      (7) payments for insurance, including self-insurance, for 
 76.3   which employees are beneficiaries, including payments for health 
 76.4   and welfare and noninsured benefit plans and payment of fees for 
 76.5   administration of plans. 
 76.6      (c) Compensation does not include: 
 76.7      (1) discounts on the price of the firm's merchandise or 
 76.8   services sold to employees, officers, or directors which are not 
 76.9   available to other customers; or 
 76.10     (2) payments to independent contractors. 
 76.11     Subd. 6.  [FIRM.] "Firm" means a corporation, individual, 
 76.12  partnership, limited liability company, trust, nonprofit 
 76.13  corporation, joint venture, association, receiver, estate, or 
 76.14  other person engaged in business activity. 
 76.15     Subd. 7.  [PROPERTY.] "Property" includes all property, 
 76.16  whether tangible or intangible, or whether real, personal, or 
 76.17  mixed. 
 76.18     Sec. 4.  [290.9403] [BUSINESSES SUBJECT TO TAX.] 
 76.19     Subdivision 1.  [TAXABLE BUSINESSES.] The tax imposed by 
 76.20  sections 2 to 8 applies to a firm engaged in business activity 
 76.21  in Minnesota, unless an exemption under subdivisions 2 to 4 
 76.22  applies. 
 76.23     Subd. 2.  [FOREIGN INSURANCE COMPANIES.] An insurance 
 76.24  company as defined in section 290.05, subdivision 1, clause (c), 
 76.25  is exempt. 
 76.26     Subd. 3.  [GOVERNMENT ENTITIES.] A governmental entity, as 
 76.27  defined in section 290.05, subdivision 1, clause (b), is exempt. 
 76.28     Subd. 4.  [OTHER EXEMPT ENTITIES.] An organization exempt 
 76.29  from taxation under Subchapter F of the Internal Revenue Code is 
 76.30  exempt, except to the extent of tax base from activities 
 76.31  generating: 
 76.32     (1) unrelated business income, as defined in sections 511 
 76.33  to 515 of the Internal Revenue Code; 
 76.34     (2) taxable income of farmers cooperatives under section 
 76.35  521 of the Internal Revenue Code; 
 76.36     (3) taxable income of political organizations under section 
 77.1   527 of the Internal Revenue Code; and 
 77.2      (4) taxable income of homeowners associations under section 
 77.3   528 of the Internal Revenue Code. 
 77.4      Sec. 5.  [290.9404] [TAX BASE.] 
 77.5      Subdivision 1.  [GENERAL RULE.] The tax base of a firm for 
 77.6   the taxable year equals the sum of the firm's business income 
 77.7   and the amounts in subdivision 2, less 
 77.8      (1) the amounts in subdivision 3, 
 77.9      (2) the capital acquisition deduction under subdivision 4, 
 77.10  and 
 77.11     (3) the exemption amount under subdivision 5. 
 77.12     All amounts are the amounts paid or accrued for the taxable 
 77.13  year under the firm's method of accounting for federal income 
 77.14  tax purposes. 
 77.15     Subd. 2.  [ADDITIONS.] The following amounts are added to 
 77.16  business income to determine tax base: 
 77.17     (1) the amount of the additions to federal taxable income 
 77.18  under section 290.01, subdivision 19c, clauses (1), (2), (3), 
 77.19  (4), (5), (8), (10), and (11), 
 77.20     (2) the amount of the following, to the extent deducted or 
 77.21  excluded in computing federal taxable income and not added under 
 77.22  clause (1): 
 77.23     (i) depreciation, amortization, or immediate or accelerated 
 77.24  write-off of the cost of tangible assets, 
 77.25     (ii) royalties, 
 77.26     (iii) dividends, except dividends representing reduction of 
 77.27  premiums to policyholders of insurance companies, and 
 77.28     (iv) interest including amounts paid, credited, or reserved 
 77.29  by insurance companies as amounts necessary to fulfill the 
 77.30  policy and other contract liability requirements of sections 805 
 77.31  and 809 of the Internal Revenue Code; 
 77.32     (3) the amount of compensation; and 
 77.33     (4) capital gains of individuals from business activity to 
 77.34  the extent excluded in computing federal taxable income. 
 77.35     Subd. 3.  [SUBTRACTIONS.] To the extent included in federal 
 77.36  taxable income, the following amounts are subtracted from income 
 78.1   to determine tax base: 
 78.2      (1) dividends received or deemed received, including the 
 78.3   foreign dividend gross-up; 
 78.4      (2) interest except amounts paid, credited, or reserved by 
 78.5   insurance companies as amounts necessary to fulfill the policy 
 78.6   and other contract liability requirements of sections 805 and 
 78.7   809 of the Internal Revenue Code; 
 78.8      (3) royalties; 
 78.9      (4) any capital loss not deducted in computing federal 
 78.10  taxable income. 
 78.11     Subd. 4.  [CAPITAL ACQUISITION DEDUCTION.] (a) The capital 
 78.12  acquisition deduction equals the amount paid or accrued for the 
 78.13  taxable year of the cost of tangible assets qualifying for 
 78.14  depreciation, amortization, or immediate or accelerated 
 78.15  deduction under the Internal Revenue Code.  Costs include 
 78.16  fabrication and installation costs.  The deduction is the full 
 78.17  amount paid or accrued, regardless of the amount allowed by 
 78.18  federal law for the taxable year. 
 78.19     (b) If the capital acquisition deduction exceeds the net 
 78.20  amount under subdivisions 1 to 3 for the taxable year, the rest 
 78.21  is a carryover capital acquisition deduction to the next three 
 78.22  taxable years.  The entire amount must be taken in the earliest 
 78.23  of the taxable years to which it may be carried. 
 78.24     Subd. 5.  [EXEMPTION.] The exemption amount is $500,000.  
 78.25  The exemption must be deducted after computation of tax base 
 78.26  under subdivisions 1 to 4, but before apportionment under 
 78.27  section 6 for multistate businesses. 
 78.28     Subd. 6.  [SPECIAL RULES FOR FINANCIAL INSTITUTIONS.] The 
 78.29  tax base of a financial institution is the amount calculated 
 78.30  under subdivisions 1 to 4, except that the addition under 
 78.31  subdivision 2, clause (2), item (iv), and the subtraction under 
 78.32  subdivision 3, clause (2), do not apply. 
 78.33     Sec. 6.  [290.9405] [MULTISTATE FIRMS.] 
 78.34     Subdivision 1.  [SCOPE.] The tax base of a firm from 
 78.35  business activity carried on partly within and partly without 
 78.36  Minnesota must be apportioned to Minnesota as provided in this 
 79.1   section. 
 79.2      Subd. 2.  [DEFINITIONS.] The definitions under section 
 79.3   290.191 apply for purposes of this section. 
 79.4      Subd. 3.  [APPORTIONMENT FORMULA.] (a) A firm must 
 79.5   apportion its tax base to Minnesota as follows.  The total tax 
 79.6   base, after deducting the capital acquisition deduction and 
 79.7   exemption, must be multiplied by the percentage that the firm's 
 79.8   sales made within Minnesota during the taxable year are of the 
 79.9   firm's total sales wherever made. 
 79.10     (b) A financial institution must apportion its tax base 
 79.11  under paragraph (a) using the receipts factor for financial 
 79.12  institutions. 
 79.13     Subd. 4.  [RULES FOR UNITARY BUSINESSES.] (a) If a business 
 79.14  activity conducted wholly within this state or partly within 
 79.15  this state is part of a unitary business, the entire tax base of 
 79.16  the unitary business is subject to apportionment under this 
 79.17  section.  The provisions of section 290.17 apply to determine if 
 79.18  a business activity is part of a unitary business. 
 79.19     (b) Each firm that is part of a unitary business must file 
 79.20  combined reports as the commissioner determines.  On the 
 79.21  reports, all intercompany transactions between domestic firms 
 79.22  that are part of the unitary business must be eliminated.  The 
 79.23  entire tax base of the unitary business must be apportioned 
 79.24  among the firms by using each firm's Minnesota sales factor in 
 79.25  the numerator of the apportionment formula and the total sales 
 79.26  factor of all firms in the unitary business in the denominator 
 79.27  of the apportionment formula. 
 79.28     (c) The tax base and apportionment factors of foreign firms 
 79.29  which are part of a unitary business are not included in the tax 
 79.30  base and apportionment factors of the unitary business.  A 
 79.31  foreign firm must file on a separate return basis. 
 79.32     Sec. 7.  [290.9406] [CREDITS.] 
 79.33     Subdivision 1.  [INSURANCE PREMIUMS TAX.] The amount of 
 79.34  premium tax paid by the firm under sections 60A.15 and 299F.21 
 79.35  to 299F.26 during the taxable year is a credit against the tax 
 79.36  under section 2. 
 80.1      Subd. 2.  [MINNESOTACARE TAX.] The amount of gross revenue 
 80.2   tax paid by the firm under sections 295.50 to 295.58 during the 
 80.3   taxable year is a credit against the tax under section 2. 
 80.4      Sec. 8.  [290.9407] [ADMINISTRATION.] 
 80.5      The commissioner of revenue shall prescribe forms and 
 80.6   instructions for payment of the tax.  The tax is due and payable 
 80.7   at the same times and under the same rules provided for the 
 80.8   franchise tax on corporations. 
 80.9      Sec. 9.  [REPEALER.] 
 80.10     Minnesota Statutes 1994, sections 290.0921; and 290.0922, 
 80.11  are repealed. 
 80.12     Sec. 10.  [EFFECTIVE DATE.] 
 80.13     Sections 1 to 9 are effective for taxable years beginning 
 80.14  after December 31, 1996, but only if the constitutional 
 80.15  amendment proposed to the people by article 1, section 1, is 
 80.16  adopted in the 1996 general election.