1.1                          A bill for an act 
  1.2             relating to taxation; providing a personal income tax 
  1.3             exemption and an exemption or credit for dependents; 
  1.4             providing a single factor corporate franchise tax 
  1.5             apportionment formula; repealing MinnesotaCare premium 
  1.6             and provider taxes; exempting sales to political 
  1.7             subdivisions of a state; amending Minnesota Statutes 
  1.8             1998, sections 60A.15, subdivision 1; 62J.041, 
  1.9             subdivision 1; 62Q.095, subdivision 6; 144.1494, 
  1.10            subdivision 1; 144.1495, subdivision 2; 144.1496, 
  1.11            subdivision 1; 214.16, subdivisions 2 and 3; 256L.02, 
  1.12            subdivisions 3 and 4; 270B.01, subdivision 8; and 
  1.13            297A.47; Minnesota Statutes 1999 Supplement, sections 
  1.14            270B.14, subdivision 1; 290.01, subdivision 19b; 
  1.15            290.191, subdivisions 2 and 3; and 297A.25, 
  1.16            subdivision 11; proposing coding for new law in 
  1.17            Minnesota Statutes, chapters 16A; and 290; repealing 
  1.18            Minnesota Statutes 1998, sections 16A.724; 16A.76; 
  1.19            62T.10; 144.1484, subdivision 2; 290.191, subdivision 
  1.20            4; 295.50, subdivisions 1, 2, 2a, 3, 6, 6a, 7, 9b, 9c, 
  1.21            10a, 10b, 12b, 13, 14, and 15; 295.51; 295.52, 
  1.22            subdivisions 1, 1a, 2, 3, 4, 4a, and 6; 295.53, 
  1.23            subdivisions 2, 3, and 4; 295.54; 295.55, subdivisions 
  1.24            1, 4, 5, 6, and 7; 295.56; 295.57, subdivisions 1, 2, 
  1.25            and 3; 295.58; 295.581; 295.582; and 295.59; Minnesota 
  1.26            Statutes 1999 Supplement, sections 13.99, subdivision 
  1.27            86b; 295.50, subdivision 4; 295.52, subdivisions 5 and 
  1.28            7; 295.53, subdivision 1; 295.55, subdivisions 2 and 
  1.29            3; and 295.57, subdivision 4. 
  1.30  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.31     Section 1.  [16A.78] [MINNESOTACARE SUBSIDIZED HEALTH 
  1.32  INSURANCE ACCOUNT.] 
  1.33     (a) A MinnesotaCare subsidized health insurance account is 
  1.34  established in the general fund. 
  1.35     (b) The commissioner shall credit to the account the 
  1.36  tobacco settlement payments received by the state each December 
  1.37  beginning December 1999 as a result of the settlement of the 
  2.1   lawsuit styled as State v. Philip Morris Inc., No. C1-94-8565 
  2.2   (Minnesota District Court, Second Judicial District). 
  2.3      (c) Money in the account is available for and may only be 
  2.4   spent for expenditures associated with the MinnesotaCare program.
  2.5      (d) The balance in the account does not cancel and remains 
  2.6   in the account until appropriated by law for the purposes 
  2.7   described in this section.  
  2.8      (e) Notwithstanding section 11A.20, investment earnings on 
  2.9   the account are credited to the account.  
  2.10     Sec. 2.  Minnesota Statutes 1998, section 60A.15, 
  2.11  subdivision 1, is amended to read: 
  2.12     Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
  2.13  before April 1, June 1, and December 1 of each year, every 
  2.14  domestic and foreign company, including town and farmers' mutual 
  2.15  insurance companies, domestic mutual insurance companies, and 
  2.16  marine insurance companies, ~~health maintenance organizations,~~ 
  2.17  ~~community integrated service networks, and nonprofit health~~ 
  2.18  ~~service plan corporations,~~ shall pay to the commissioner of 
  2.19  revenue installments equal to one-third of the insurer's total 
  2.20  estimated tax for the current year.  Except as provided in 
  2.21  ~~paragraphs~~ paragraph (d), ~~(e), (h), and (i),~~ installments must 
  2.22  be based on a sum equal to two percent of the premiums described 
  2.23  in paragraph (b). 
  2.24     (b) Installments under paragraph (a)~~,~~ or (d)~~, or (e)~~ are 
  2.25  percentages of gross premiums less return premiums on all direct 
  2.26  business received by the insurer in this state, or by its agents 
  2.27  for it, in cash or otherwise, during such year. 
  2.28     (c) Failure of a company to make payments of at least 
  2.29  one-third of either (1) the total tax paid during the previous 
  2.30  calendar year or (2) 80 percent of the actual tax for the 
  2.31  current calendar year shall subject the company to the penalty 
  2.32  and interest provided in this section, unless the total tax for 
  2.33  the current tax year is $500 or less. 
  2.34     (d) ~~For health maintenance organizations, nonprofit health~~ 
  2.35  ~~service plan corporations, and community integrated service~~ 
  2.36  ~~networks, the installments must be based on an amount determined~~ 
  3.1   ~~under paragraph (h) or (i).~~ 
  3.2      ~~(e)~~ For purposes of computing installments for town and 
  3.3   farmers' mutual insurance companies and for mutual property 
  3.4   casualty companies with total assets on December 31, 1989, of 
  3.5   $1,600,000,000 or less, the following rates apply: 
  3.6      (1) for all life insurance, two percent; 
  3.7      (2) for town and farmers' mutual insurance companies and 
  3.8   for mutual property and casualty companies with total assets of 
  3.9   $5,000,000 or less, on all other coverages, one percent; and 
  3.10     (3) for mutual property and casualty companies with total 
  3.11  assets on December 31, 1989, of $1,600,000,000 or less, on all 
  3.12  other coverages, 1.26 percent. 
  3.13     ~~(f)~~ (e) If the aggregate amount of premium tax payments 
  3.14  under this section and the fire marshal tax payments under 
  3.15  section 299F.21 made during a calendar year is equal to or 
  3.16  exceeds $120,000, all tax payments in the subsequent calendar 
  3.17  year must be paid by means of a funds transfer as defined in 
  3.18  section 336.4A-104, paragraph (a).  The funds transfer payment 
  3.19  date, as defined in section 336.4A-401, must be on or before the 
  3.20  date the payment is due.  If the date the payment is due is not 
  3.21  a funds transfer business day, as defined in section 336.4A-105, 
  3.22  paragraph (a), clause (4), the payment date must be on or before 
  3.23  the funds transfer business day next following the date the 
  3.24  payment is due.  
  3.25     ~~(g)~~ (f) Premiums under medical assistance, general 
  3.26  assistance medical care, the MinnesotaCare program, and the 
  3.27  Minnesota comprehensive health insurance plan and all payments, 
  3.28  revenues, and reimbursements received from the federal 
  3.29  government for Medicare-related coverage as defined in section 
  3.30  62A.31, subdivision 3, paragraph (e), are not subject to tax 
  3.31  under this section. 
  3.32     ~~(h) For calendar years 1997, 1998, and 1999, the~~ 
  3.33  ~~installments for health maintenance organizations, community~~ 
  3.34  ~~integrated service networks, and nonprofit health service plan~~ 
  3.35  ~~corporations must be based on an amount equal to one percent of~~ 
  3.36  ~~premiums described under paragraph (b).  Health maintenance~~ 
  4.1   ~~organizations, community integrated service networks, and~~ 
  4.2   ~~nonprofit health service plan corporations that have met the~~ 
  4.3   ~~cost containment goals established under section 62J.04 in the~~ 
  4.4   ~~individual and small employer market for calendar year 1996 are~~ 
  4.5   ~~exempt from payment of the tax imposed under this section for~~ 
  4.6   ~~premiums paid after March 30, 1997, and before April 1, 1998.~~  
  4.7   ~~Health maintenance organizations, community integrated service~~ 
  4.8   ~~networks, and nonprofit health service plan corporations that~~ 
  4.9   ~~have met the cost containment goals established under section~~ 
  4.10  ~~62J.04 in the individual and small employer market for calendar~~ 
  4.11  ~~year 1997 are exempt from payment of the tax imposed under this~~ 
  4.12  ~~section for premiums paid after March 30, 1998, and before April~~ 
  4.13  ~~1, 1999.  Health maintenance organizations, community integrated~~ 
  4.14  ~~service networks, and nonprofit health service plan corporations~~ 
  4.15  ~~that have met the cost containment goals established under~~ 
  4.16  ~~section 62J.04 in the individual and small employer market for~~ 
  4.17  ~~calendar year 1998 are exempt from payment of the tax imposed~~ 
  4.18  ~~under this section for premiums paid after March 30, 1999, and~~ 
  4.19  ~~before January 1, 2000.~~  
  4.20     ~~(i) For calendar years after 1999, the commissioner of~~ 
  4.21  ~~finance shall determine the balance of the health care access~~ 
  4.22  ~~fund on September 1 of each year beginning September 1, 1999.~~  
  4.23  ~~If the commissioner determines that there is no structural~~ 
  4.24  ~~deficit for the next fiscal year, no tax shall be imposed under~~ 
  4.25  ~~paragraph (d) for the following calendar year.  If the~~ 
  4.26  ~~commissioner determines that there will be a structural deficit~~ 
  4.27  ~~in the fund for the following fiscal year, then the~~ 
  4.28  ~~commissioner, in consultation with the commissioner of revenue,~~ 
  4.29  ~~shall determine the amount needed to eliminate the structural~~ 
  4.30  ~~deficit and a tax shall be imposed under paragraph (d) for the~~ 
  4.31  ~~following calendar year.  The commissioner shall determine the~~ 
  4.32  ~~rate of the tax as either one-quarter of one percent, one-half~~ 
  4.33  ~~of one percent, three-quarters of one percent, or one percent of~~ 
  4.34  ~~premiums described in paragraph (b), whichever is the lowest of~~ 
  4.35  ~~those rates that the commissioner determines will produce~~ 
  4.36  ~~sufficient revenue to eliminate the projected structural~~ 
  5.1   ~~deficit.  The commissioner of finance shall publish in the State~~ 
  5.2   ~~Register by October 1 of each year the amount of tax to be~~ 
  5.3   ~~imposed for the following calendar year.  In determining the~~ 
  5.4   ~~structural balance of the health care access fund for fiscal~~ 
  5.5   ~~years 2000 and 2001, the commissioner shall disregard the~~ 
  5.6   ~~transfer amount from the health care access fund to the general~~ 
  5.7   ~~fund for expenditures associated with the services provided to~~ 
  5.8   ~~pregnant women and children under the age of two enrolled in the~~ 
  5.9   ~~MinnesotaCare program.~~  
  5.10     ~~(j) In approving the premium rates as required in sections~~ 
  5.11  ~~62L.08, subdivision 8, and 62A.65, subdivision 3, the~~ 
  5.12  ~~commissioners of health and commerce shall ensure that any~~ 
  5.13  ~~exemption from the tax as described in paragraphs (h) and (i) is~~ 
  5.14  ~~reflected in the premium rate.~~  
  5.15     Sec. 3.  Minnesota Statutes 1998, section 62J.041, 
  5.16  subdivision 1, is amended to read: 
  5.17     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  5.18  section, the following definitions apply. 
  5.19     (b) "Health plan company" has the definition provided in 
  5.20  section 62Q.01. 
  5.21     (c) "Total expenditures" means incurred claims or 
  5.22  expenditures on health care services, administrative expenses, 
  5.23  charitable contributions, and all other payments made by health 
  5.24  plan companies out of premium revenues. 
  5.25     (d) "Net expenditures" means total expenditures minus 
  5.26  exempted taxes and assessments and payments or allocations made 
  5.27  to establish or maintain reserves.  
  5.28     (e) "Exempted taxes and assessments" means direct payments 
  5.29  for taxes to government agencies, contributions to the Minnesota 
  5.30  comprehensive health association, the medical assistance 
  5.31  provider's surcharge under section 256.9657, the MinnesotaCare 
  5.32  provider tax under Minnesota Statutes 1998, section 295.52, 
  5.33  assessments by the health coverage reinsurance association, 
  5.34  assessments by the Minnesota life and health insurance guaranty 
  5.35  association, assessments by the Minnesota risk adjustment 
  5.36  association, and any new assessments imposed by federal or state 
  6.1   law. 
  6.2      (f) "Consumer cost-sharing or subscriber liability" means 
  6.3   enrollee coinsurance, copayment, deductible payments, and 
  6.4   amounts in excess of benefit plan maximums.  
  6.5      Sec. 4.  Minnesota Statutes 1998, section 62Q.095, 
  6.6   subdivision 6, is amended to read: 
  6.7      Subd. 6.  [EXEMPTION.] A health plan company, to the extent 
  6.8   that it operates as a staff model health plan company ~~as defined~~ 
  6.9   ~~in section 295.50, subdivision 12b,~~ by employing allied 
  6.10  independent health care providers to deliver health care 
  6.11  services to enrollees, is exempt from this section.  For 
  6.12  purposes of this subdivision, "staff model health plan company" 
  6.13  means a health plan company as defined in section 62Q.01, 
  6.14  subdivision 4, that employs one or more types of health care 
  6.15  provider to deliver health care services to the health plan 
  6.16  company's enrollees. 
  6.17     Sec. 5.  Minnesota Statutes 1998, section 144.1494, 
  6.18  subdivision 1, is amended to read: 
  6.19     Subdivision 1.  [CREATION OF ACCOUNT.] A rural physician 
  6.20  education account is established in the ~~health care~~ 
  6.21  ~~access~~ general fund.  The commissioner shall use money from the 
  6.22  account to establish a loan forgiveness program for medical 
  6.23  residents agreeing to practice in designated rural areas, as 
  6.24  defined by the commissioner.  Appropriations made to this 
  6.25  account do not cancel and are available until expended, except 
  6.26  that at the end of each biennium the commissioner shall cancel 
  6.27  to the health care access fund any remaining unobligated balance 
  6.28  in this account. 
  6.29     Sec. 6.  Minnesota Statutes 1998, section 144.1495, 
  6.30  subdivision 2, is amended to read: 
  6.31     Subd. 2.  [CREATION OF ACCOUNT.] A midlevel practitioner 
  6.32  education account is established in the ~~health care~~ 
  6.33  ~~access~~ general fund.  The commissioner shall use money from the 
  6.34  account to establish a loan forgiveness program for midlevel 
  6.35  practitioners agreeing to practice in designated rural areas.  
  6.36     Sec. 7.  Minnesota Statutes 1998, section 144.1496, 
  7.1   subdivision 1, is amended to read: 
  7.2      Subdivision 1.  [CREATION OF THE ACCOUNT.] An education 
  7.3   account in the ~~health care access~~ general fund is established 
  7.4   for a loan forgiveness program for nurses who agree to practice 
  7.5   nursing in a nursing home or intermediate care facility for 
  7.6   persons with mental retardation or related conditions.  The 
  7.7   account consists of money appropriated by the legislature and 
  7.8   repayments and penalties collected under subdivision 4.  Money 
  7.9   from the account must be used for a loan forgiveness program.  
  7.10     Sec. 8.  Minnesota Statutes 1998, section 214.16, 
  7.11  subdivision 2, is amended to read: 
  7.12     Subd. 2.  [BOARD COOPERATION REQUIRED.] The board shall 
  7.13  assist the commissioner of health in data collection activities 
  7.14  required under Laws 1992, chapter 549, article 7~~, and shall~~ 
  7.15  ~~assist the commissioner of revenue in activities related to~~ 
  7.16  ~~collection of the health care provider tax required under Laws~~ 
  7.17  ~~1992, chapter 549, article 9~~.  Upon the request of the 
  7.18  commissioner ~~or the commissioner of revenue~~, the board shall 
  7.19  make available names and addresses of current licensees and 
  7.20  provide other information or assistance as needed. 
  7.21     Sec. 9.  Minnesota Statutes 1998, section 214.16, 
  7.22  subdivision 3, is amended to read: 
  7.23     Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
  7.24  shall take disciplinary action, which may include license 
  7.25  revocation, against a regulated person for: 
  7.26     (1) intentional failure to provide the commissioner of 
  7.27  health with the data required under chapter 62J; 
  7.28     ~~(2) intentional failure to provide the commissioner of~~ 
  7.29  ~~revenue with data on gross revenue and other information~~ 
  7.30  ~~required for the commissioner to implement sections 295.50 to~~ 
  7.31  ~~295.58;~~ 
  7.32     ~~(3) intentional failure to pay the health care provider tax~~ 
  7.33  ~~required under section 295.52;~~ and 
  7.34     ~~(4)~~ (2) entering into a contract or arrangement that is 
  7.35  prohibited under sections 62J.70 to 62J.73.  
  7.36     Sec. 10.  Minnesota Statutes 1998, section 256L.02, 
  8.1   subdivision 3, is amended to read: 
  8.2      Subd. 3.  [FINANCIAL MANAGEMENT.] (a) ~~The commissioner~~ 
  8.3   ~~shall manage spending for the MinnesotaCare program in a manner~~ 
  8.4   ~~that maintains a minimum reserve in accordance with section~~ 
  8.5   ~~16A.76.~~  As part of each state revenue and expenditure forecast, 
  8.6   the commissioner must make an assessment of the expected 
  8.7   expenditures for the services covered ~~services~~ under the 
  8.8   MinnesotaCare program for the remainder of the current biennium 
  8.9   and for the following biennium.  ~~The estimated expenditure,~~ 
  8.10  ~~including the reserve requirements described in section 16A.76,~~ 
  8.11  ~~shall be compared to an estimate of the revenues that will be~~ 
  8.12  ~~available in the health care access fund.  Based on this~~ 
  8.13  ~~comparison, and~~ After consulting with the chairs of the house 
  8.14  ways and means committee and the senate finance committee, and 
  8.15  the legislative commission on health care access, the 
  8.16  commissioner shall, as necessary, make the adjustments specified 
  8.17  in paragraph (b) to ensure that expenditures remain within the 
  8.18  limits of the available ~~revenues for the remainder of the~~ 
  8.19  ~~current biennium and for the following biennium~~ appropriations.  
  8.20  The commissioner shall not hire additional staff using 
  8.21  appropriations from the ~~health care access~~ general fund until 
  8.22  the commissioner of finance makes a determination that the 
  8.23  adjustments implemented under paragraph (b) are sufficient to 
  8.24  allow MinnesotaCare expenditures to remain within the limits of 
  8.25  available ~~revenues for the remainder of the current biennium and~~ 
  8.26  ~~for the following biennium~~ appropriations. 
  8.27     (b) The adjustments the commissioner shall use must be 
  8.28  implemented in this order:  first, stop enrollment of single 
  8.29  adults and households without children; second, upon 45 days' 
  8.30  notice, stop coverage of single adults and households without 
  8.31  children already enrolled in the MinnesotaCare program; third, 
  8.32  upon 90 days' notice, decrease the premium subsidy amounts by 
  8.33  ten percent for families with gross annual income above 200 
  8.34  percent of the federal poverty guidelines; fourth, upon 90 days' 
  8.35  notice, decrease the premium subsidy amounts by ten percent for 
  8.36  families with gross annual income at or below 200 percent; and 
  9.1   fifth, require applicants to be uninsured for at least six 
  9.2   months prior to eligibility in the MinnesotaCare program.  If 
  9.3   these measures are insufficient to limit the expenditures to the 
  9.4   ~~estimated amount of revenue~~ available appropriations, the 
  9.5   commissioner shall further limit enrollment or decrease premium 
  9.6   subsidies. 
  9.7      Sec. 11.  Minnesota Statutes 1998, section 256L.02, 
  9.8   subdivision 4, is amended to read: 
  9.9      Subd. 4.  [FUNDING FOR PREGNANT WOMEN AND CHILDREN UNDER 
  9.10  AGE TWO.] For fiscal years beginning on or after July 1, 1999, 
  9.11  the state cost of health care services provided to MinnesotaCare 
  9.12  enrollees who are pregnant women or children under age two shall 
  9.13  be paid out of the general fund ~~rather than the health care~~ 
  9.14  ~~access fund~~.  If the commissioner of finance decides to pay for 
  9.15  these costs using a source other than the general fund, the 
  9.16  commissioner shall include the change as a budget initiative in 
  9.17  the biennial or supplemental budget, and shall not change the 
  9.18  funding source through a forecast modification. 
  9.19     Sec. 12.  Minnesota Statutes 1998, section 270B.01, 
  9.20  subdivision 8, is amended to read: 
  9.21     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
  9.22  chapter only, unless expressly stated otherwise, "Minnesota tax 
  9.23  laws" means the taxes, refunds, and fees administered by or paid 
  9.24  to the commissioner under chapters 115B (except taxes imposed 
  9.25  under sections 115B.21 to 115B.24), 289A (except taxes imposed 
  9.26  under sections 298.01, 298.015, and 298.24), 290, 290A, 291, 
  9.27  297A, and 297H ~~and sections 295.50 to 295.59~~, or any similar 
  9.28  Indian tribal tax administered by the commissioner pursuant to 
  9.29  any tax agreement between the state and the Indian tribal 
  9.30  government, and includes any laws for the assessment, 
  9.31  collection, and enforcement of those taxes, refunds, and fees. 
  9.32     Sec. 13.  Minnesota Statutes 1999 Supplement, section 
  9.33  270B.14, subdivision 1, is amended to read: 
  9.34     Subdivision 1.  [DISCLOSURE TO COMMISSIONER OF HUMAN 
  9.35  SERVICES.] (a) On the request of the commissioner of human 
  9.36  services, the commissioner shall disclose return information 
 10.1   regarding taxes imposed by chapter 290, and claims for refunds 
 10.2   under chapter 290A, to the extent provided in paragraph (b) and 
 10.3   for the purposes set forth in paragraph (c). 
 10.4      (b) Data that may be disclosed are limited to data relating 
 10.5   to the identity, whereabouts, employment, income, and property 
 10.6   of a person owing or alleged to be owing an obligation of child 
 10.7   support. 
 10.8      (c) The commissioner of human services may request data 
 10.9   only for the purposes of carrying out the child support 
 10.10  enforcement program and to assist in the location of parents who 
 10.11  have, or appear to have, deserted their children.  Data received 
 10.12  may be used only as set forth in section 256.978. 
 10.13     (d) The commissioner shall provide the records and 
 10.14  information necessary to administer the supplemental housing 
 10.15  allowance to the commissioner of human services.  
 10.16     (e) At the request of the commissioner of human services, 
 10.17  the commissioner of revenue shall electronically match the 
 10.18  social security numbers and names of participants in the 
 10.19  telephone assistance plan operated under sections 237.69 to 
 10.20  237.711, with those of property tax refund filers, and determine 
 10.21  whether each participant's household income is within the 
 10.22  eligibility standards for the telephone assistance plan. 
 10.23     (f) The commissioner may provide records and information 
 10.24  collected under Minnesota Statutes 1998, sections 295.50 to 
 10.25  295.59 to the commissioner of human services for purposes of the 
 10.26  Medicaid Voluntary Contribution and Provider-Specific Tax 
 10.27  Amendments of 1991, Public Law Number 102-234.  Upon the written 
 10.28  agreement by the United States Department of Health and Human 
 10.29  Services to maintain the confidentiality of the data, the 
 10.30  commissioner may provide records and information collected under 
 10.31  Minnesota Statutes 1998, sections 295.50 to 295.59, to the 
 10.32  Health Care Financing Administration section of the United 
 10.33  States Department of Health and Human Services for purposes of 
 10.34  meeting federal reporting requirements.  
 10.35     (g) The commissioner may provide records and information to 
 10.36  the commissioner of human services as necessary to administer 
 11.1   the early refund of refundable tax credits. 
 11.2      (h) The commissioner may disclose information to the 
 11.3   commissioner of human services necessary to verify income for 
 11.4   eligibility and premium payment under the MinnesotaCare program, 
 11.5   under section 256L.05, subdivision 2. 
 11.6      (i) The commissioner may disclose information to the 
 11.7   commissioner of human services necessary to verify whether 
 11.8   applicants or recipients for the Minnesota family investment 
 11.9   program, general assistance, food stamps, and Minnesota 
 11.10  supplemental aid program have claimed refundable tax credits 
 11.11  under chapter 290 and the property tax refund under chapter 
 11.12  290A, and the amounts of the credits. 
 11.13     Sec. 14.  Minnesota Statutes 1999 Supplement, section 
 11.14  290.01, subdivision 19b, is amended to read: 
 11.15     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 11.16  individuals, estates, and trusts, there shall be subtracted from 
 11.17  federal taxable income: 
 11.18     (1) interest income on obligations of any authority, 
 11.19  commission, or instrumentality of the United States to the 
 11.20  extent includable in taxable income for federal income tax 
 11.21  purposes but exempt from state income tax under the laws of the 
 11.22  United States; 
 11.23     (2) if included in federal taxable income, the amount of 
 11.24  any overpayment of income tax to Minnesota or to any other 
 11.25  state, for any previous taxable year, whether the amount is 
 11.26  received as a refund or as a credit to another taxable year's 
 11.27  income tax liability; 
 11.28     (3) the amount paid to others, less the credit allowed 
 11.29  under section 290.0674, not to exceed $1,625 for each qualifying 
 11.30  child in grades kindergarten to 6 and $2,500 for each qualifying 
 11.31  child in grades 7 to 12, for tuition, textbooks, and 
 11.32  transportation of each qualifying child in attending an 
 11.33  elementary or secondary school situated in Minnesota, North 
 11.34  Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
 11.35  this state may legally fulfill the state's compulsory attendance 
 11.36  laws, which is not operated for profit, and which adheres to the 
 12.1   provisions of the Civil Rights Act of 1964 and chapter 363.  For 
 12.2   the purposes of this clause, "tuition" includes fees or tuition 
 12.3   as defined in section 290.0674, subdivision 1, clause (1).  As 
 12.4   used in this clause, "textbooks" includes books and other 
 12.5   instructional materials and equipment used in elementary and 
 12.6   secondary schools in teaching only those subjects legally and 
 12.7   commonly taught in public elementary and secondary schools in 
 12.8   this state.  Equipment expenses qualifying for deduction 
 12.9   includes expenses as defined and limited in section 290.0674, 
 12.10  subdivision 1, clause (3).  "Textbooks" does not include 
 12.11  instructional books and materials used in the teaching of 
 12.12  religious tenets, doctrines, or worship, the purpose of which is 
 12.13  to instill such tenets, doctrines, or worship, nor does it 
 12.14  include books or materials for, or transportation to, 
 12.15  extracurricular activities including sporting events, musical or 
 12.16  dramatic events, speech activities, driver's education, or 
 12.17  similar programs.  For purposes of the subtraction provided by 
 12.18  this clause, "qualifying child" has the meaning given in section 
 12.19  32(c)(3) of the Internal Revenue Code; 
 12.20     (4) contributions made in taxable years beginning after 
 12.21  December 31, 1981, and before January 1, 1985, to a qualified 
 12.22  governmental pension plan, an individual retirement account, 
 12.23  simplified employee pension, or qualified plan covering a 
 12.24  self-employed person that were included in Minnesota gross 
 12.25  income in the taxable year for which the contributions were made 
 12.26  but were deducted or were not included in the computation of 
 12.27  federal adjusted gross income, less any amount allowed to be 
 12.28  subtracted as a distribution under this subdivision or a 
 12.29  predecessor provision in taxable years that began before January 
 12.30  1, 2000.  This subtraction applies only for taxable years 
 12.31  beginning after December 31, 1999, and before January 1, 2001; 
 12.32     (5) income as provided under section 290.0802; 
 12.33     (6) the amount of unrecovered accelerated cost recovery 
 12.34  system deductions allowed under subdivision 19g; 
 12.35     (7) to the extent included in federal adjusted gross 
 12.36  income, income realized on disposition of property exempt from 
 13.1   tax under section 290.491; 
 13.2      (8) to the extent not deducted in determining federal 
 13.3   taxable income, the amount paid for health insurance of 
 13.4   self-employed individuals as determined under section 162(l) of 
 13.5   the Internal Revenue Code, except that the percent limit does 
 13.6   not apply.  If the taxpayer deducted insurance payments under 
 13.7   section 213 of the Internal Revenue Code of 1986, the 
 13.8   subtraction under this clause must be reduced by the lesser of: 
 13.9      (i) the total itemized deductions allowed under section 
 13.10  63(d) of the Internal Revenue Code, less state, local, and 
 13.11  foreign income taxes deductible under section 164 of the 
 13.12  Internal Revenue Code and the standard deduction under section 
 13.13  63(c) of the Internal Revenue Code; or 
 13.14     (ii) the lesser of (A) the amount of insurance qualifying 
 13.15  as "medical care" under section 213(d) of the Internal Revenue 
 13.16  Code to the extent not deducted under section 162(1) of the 
 13.17  Internal Revenue Code or excluded from income or (B) the total 
 13.18  amount deductible for medical care under section 213(a); 
 13.19     (9) the exemption amount allowed under Laws 1995, chapter 
 13.20  255, article 3, section 2, subdivision 3; 
 13.21     (10) to the extent included in federal taxable income, 
 13.22  postservice benefits for youth community service under section 
 13.23  124D.42 for volunteer service under United States Code, title 
 13.24  42, section 5011(d), as amended; 
 13.25     (11) to the extent not deducted in determining federal 
 13.26  taxable income by an individual who does not itemize deductions 
 13.27  for federal income tax purposes for the taxable year, an amount 
 13.28  equal to 50 percent of the excess of charitable contributions 
 13.29  allowable as a deduction for the taxable year under section 
 13.30  170(a) of the Internal Revenue Code over $500; ~~and~~ 
 13.31     (12) to the extent included in federal taxable income, 
 13.32  holocaust victims' settlement payments for any injury incurred 
 13.33  as a result of the holocaust, if received by an individual who 
 13.34  was persecuted for racial or religious reasons by Nazi Germany 
 13.35  or any other Axis regime or an heir of such a person~~.~~; 
 13.36     (13) an amount equal to $1,200 for each of the taxpayer's 
 14.1   personal exemptions, as defined in section 151 of the Internal 
 14.2   Revenue Code, and allowed on the taxpayer's federal tax return 
 14.3   for the tax year without regard to the phase-out under section 
 14.4   151(d)(3) of the Internal Revenue Code.  For taxable years 
 14.5   beginning after December 31, 2000, the commissioner shall adjust 
 14.6   the subtraction amount by the percentage determined under 
 14.7   section 290.06, subdivision 2d, for the taxable year; and 
 14.8      (14) an amount equal to $1,200 for each of the taxpayer's 
 14.9   dependent exemptions, as defined in section 152 of the Internal 
 14.10  Revenue Code, and allowed on the taxpayer's federal tax return 
 14.11  for the tax year without regard to the phase-out under section 
 14.12  151(d)(3) of the Internal Revenue Code.  For taxable years 
 14.13  beginning after December 31, 2000, the commissioner shall adjust 
 14.14  the subtraction amount by the percentage determined under 
 14.15  section 290.06, subdivision 2d, for the taxable year.  The 
 14.16  subtraction in this clause is not allowed to taxpayers who claim 
 14.17  the credit in section 290.0676. 
 14.18     Sec. 15.  [290.0676] [CHILD TAX CREDIT.] 
 14.19     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
 14.20  a credit against the tax imposed by this chapter equal to $66 
 14.21  for each dependent exemption as defined in section 152 of the 
 14.22  Internal Revenue Code, and allowed on the taxpayer's federal tax 
 14.23  return for the tax year.  The credit is not allowed to an 
 14.24  individual who claims the subtraction in section 290.01, 
 14.25  subdivision 19b, clause (14). 
 14.26     For a nonresident or part-year resident, the credit 
 14.27  determined under this section must be allocated based on the 
 14.28  percentage calculated under section 290.06, subdivision 2c, 
 14.29  paragraph (e). 
 14.30     For taxable years beginning after December 31, 2000, the 
 14.31  commissioner shall adjust the credit amount by the percentage 
 14.32  determined under section 290.06, subdivision 2d, for the taxable 
 14.33  year. 
 14.34     Subd. 2.  [CREDIT REFUNDABLE.] If the amount of credit 
 14.35  which the claimant is eligible to receive under this section 
 14.36  exceeds the claimant's tax liability under this chapter, the 
 15.1   commissioner shall refund the excess to the claimant. 
 15.2      Sec. 16.  Minnesota Statutes 1999 Supplement, section 
 15.3   290.191, subdivision 2, is amended to read: 
 15.4      Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
 15.5   Except for those trades or businesses required to use a 
 15.6   different formula under subdivision 3 or section 290.35 or 
 15.7   290.36, and for those trades or businesses that receive 
 15.8   permission to use some other method under section 290.20 ~~or~~ 
 15.9   ~~under subdivision 4~~, a trade or business required to apportion 
 15.10  its net income must apportion its income to this state on the 
 15.11  basis of the ~~percentage obtained by taking the sum of:~~  
 15.12     ~~(1) 75 percent of the~~ percentage which the sales made 
 15.13  within this state in connection with the trade or business 
 15.14  during the tax period are of the total sales wherever made in 
 15.15  connection with the trade or business during the tax period~~;~~. 
 15.16     ~~(2) 12.5 percent of the percentage which the total tangible~~ 
 15.17  ~~property used by the taxpayer in this state in connection with~~ 
 15.18  ~~the trade or business during the tax period is of the total~~ 
 15.19  ~~tangible property, wherever located, used by the taxpayer in~~ 
 15.20  ~~connection with the trade or business during the tax period; and~~ 
 15.21     ~~(3) 12.5 percent of the percentage which the taxpayer's~~ 
 15.22  ~~total payrolls paid or incurred in this state or paid in respect~~ 
 15.23  ~~to labor performed in this state in connection with the trade or~~ 
 15.24  ~~business during the tax period are of the taxpayer's total~~ 
 15.25  ~~payrolls paid or incurred in connection with the trade or~~ 
 15.26  ~~business during the tax period.~~  
 15.27     Sec. 17.  Minnesota Statutes 1999 Supplement, section 
 15.28  290.191, subdivision 3, is amended to read: 
 15.29     Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
 15.30  INSTITUTIONS.] Except for an investment company required to 
 15.31  apportion its income under section 290.36, a financial 
 15.32  institution that is required to apportion its net income must 
 15.33  apportion its net income to this state on the basis of the 
 15.34  ~~percentage obtained by taking the sum of:~~  
 15.35     ~~(1) 75 percent of the~~ percentage which the receipts from 
 15.36  within this state in connection with the trade or business 
 16.1   during the tax period are of the total receipts in connection 
 16.2   with the trade or business during the tax period, from wherever 
 16.3   derived~~;~~. 
 16.4      ~~(2) 12.5 percent of the percentage which the sum of the~~ 
 16.5   ~~total tangible property used by the taxpayer in this state and~~ 
 16.6   ~~the intangible property owned by the taxpayer and attributed to~~ 
 16.7   ~~this state in connection with the trade or business during the~~ 
 16.8   ~~tax period is of the sum of the total tangible property,~~ 
 16.9   ~~wherever located, used by the taxpayer and the intangible~~ 
 16.10  ~~property owned by the taxpayer and attributed to all states in~~ 
 16.11  ~~connection with the trade or business during the tax period; and~~ 
 16.12     ~~(3) 12.5 percent of the percentage which the taxpayer's~~ 
 16.13  ~~total payrolls paid or incurred in this state or paid in respect~~ 
 16.14  ~~to labor performed in this state in connection with the trade or~~ 
 16.15  ~~business during the tax period are of the taxpayer's total~~ 
 16.16  ~~payrolls paid or incurred in connection with the trade or~~ 
 16.17  ~~business during the tax period.~~ 
 16.18     Sec. 18.  Minnesota Statutes 1999 Supplement, section 
 16.19  297A.25, subdivision 11, is amended to read: 
 16.20     Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
 16.21  all sales, including sales in which title is retained by a 
 16.22  seller or a vendor or is assigned to a third party under an 
 16.23  installment sale or lease purchase agreement under section 
 16.24  465.71, of tangible personal property to, and all storage, use 
 16.25  or consumption of such property by~~,~~ the following governmental 
 16.26  entities are exempt: 
 16.27     (1) the United States and its agencies and 
 16.28  instrumentalities~~,~~; 
 16.29     (2) the University of Minnesota, state universities, 
 16.30  community colleges, technical colleges, state academies, and the 
 16.31  Perpich center for arts education~~, an instrumentality of a~~ 
 16.32  ~~political subdivision that is accredited as an optional/special~~ 
 16.33  ~~function school by the North Central Association of Colleges and~~ 
 16.34  ~~Schools, school districts,~~; 
 16.35     (3) public libraries, public library systems, multicounty, 
 16.36  multitype library systems as defined in section 134.001, ~~county~~ 
 17.1   ~~law libraries under chapter 134A,~~ the state library under 
 17.2   section 480.09, and the legislative reference library ~~are~~ 
 17.3   ~~exempt~~; and 
 17.4      (4) political subdivisions of a state and their agencies 
 17.5   and instrumentalities. 
 17.6      ~~As used in this subdivision, "school districts" means~~ 
 17.7   ~~public school entities and districts of every kind and nature~~ 
 17.8   ~~organized under the laws of the state of Minnesota, including,~~ 
 17.9   ~~without limitation, school districts, intermediate school~~ 
 17.10  ~~districts, education districts, service cooperatives, secondary~~ 
 17.11  ~~vocational cooperative centers, special education cooperatives,~~ 
 17.12  ~~joint purchasing cooperatives, telecommunication cooperatives,~~ 
 17.13  ~~regional management information centers, and any instrumentality~~ 
 17.14  ~~of a school district, as defined in section 471.59.~~ 
 17.15     Sales exempted by this subdivision include sales under 
 17.16  section 297A.01, subdivision 3, paragraph (f).  
 17.17     ~~Sales to hospitals and nursing homes owned and operated by~~ 
 17.18  ~~political subdivisions of the state are exempt under this~~ 
 17.19  ~~subdivision.~~  
 17.20     ~~Sales of supplies and equipment used in the operation of an~~ 
 17.21  ~~ambulance service owned and operated by a political subdivision~~ 
 17.22  ~~of the state are exempt under this subdivision provided that the~~ 
 17.23  ~~supplies and equipment are used in the course of providing~~ 
 17.24  ~~medical care.  Sales to a political subdivision of repair and~~ 
 17.25  ~~replacement parts for emergency rescue vehicles and fire trucks~~ 
 17.26  ~~and apparatus are exempt under this subdivision.~~  
 17.27     ~~Sales to a political subdivision of machinery and~~ 
 17.28  ~~equipment, except for motor vehicles, used directly for mixed~~ 
 17.29  ~~municipal solid waste management services at a solid waste~~ 
 17.30  ~~disposal facility as defined in section 115A.03, subdivision 10,~~ 
 17.31  ~~are exempt under this subdivision.~~  
 17.32     ~~Sales to political subdivisions of chore and homemaking~~ 
 17.33  ~~services to be provided to elderly or disabled individuals are~~ 
 17.34  ~~exempt.~~ 
 17.35     ~~Sales to a town of gravel and of machinery, equipment, and~~ 
 17.36  ~~accessories, except motor vehicles, used exclusively for road~~ 
 18.1   ~~and bridge maintenance, and leases of motor vehicles exempt from~~ 
 18.2   ~~tax under section 297B.03, clause (10), are exempt.~~ 
 18.3      Sales of telephone services to the department of 
 18.4   administration that are used to provide telecommunications 
 18.5   services through the intertechnologies revolving fund are exempt 
 18.6   under this subdivision. 
 18.7      This exemption shall not apply to building, construction or 
 18.8   reconstruction materials purchased by a contractor or a 
 18.9   subcontractor as a part of a lump-sum contract or similar type 
 18.10  of contract with a guaranteed maximum price covering both labor 
 18.11  and materials for use in the construction, alteration, or repair 
 18.12  of a building or facility.  This exemption does not apply to 
 18.13  construction materials purchased by tax exempt entities or their 
 18.14  contractors to be used in constructing buildings or facilities 
 18.15  which will not be used principally by the tax exempt entities. 
 18.16     This exemption does not apply to the leasing of a motor 
 18.17  vehicle as defined in section 297B.01, subdivision 5, except for:
 18.18     (1) leases entered into by the United States or its 
 18.19  agencies or instrumentalities; and 
 18.20     (2) leases entered into by a political subdivision of motor 
 18.21  vehicles exempt from tax under chapter 297B.  
 18.22     ~~The tax imposed on sales to political subdivisions of the~~ 
 18.23  ~~state under this section applies to all political subdivisions~~ 
 18.24  ~~other than those explicitly exempted under this subdivision,~~ 
 18.25  ~~notwithstanding section 115A.69, subdivision 6, 116A.25,~~ 
 18.26  ~~360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2,~~ 
 18.27  ~~469.127, 473.448, 473.545, or 473.608 or any other law to the~~ 
 18.28  ~~contrary enacted before 1992.~~ 
 18.29     Sales exempted by this subdivision include sales made to 
 18.30  other states ~~or political subdivisions of other states,~~ if the 
 18.31  sale would be exempt from taxation if it occurred in that state, 
 18.32  but do not include sales under section 297A.01, subdivision 3, 
 18.33  paragraphs (c) and (e). 
 18.34     Sec. 19.  Minnesota Statutes 1998, section 297A.47, is 
 18.35  amended to read: 
 18.36     297A.47 [REPORTING OF SALES TAX ON MINNESOTA GOVERNMENTS.] 
 19.1      The commissioner shall estimate the amount of revenues 
 19.2   derived from imposing the tax under this chapter and chapter 
 19.3   297B on state agencies and political subdivisions for each 
 19.4   fiscal year and shall report this amount to the commissioner of 
 19.5   finance before the time for filing reports for the fiscal year 
 19.6   with the United States Department of Commerce.  The commissioner 
 19.7   of finance in reporting the sales tax and sales tax on motor 
 19.8   vehicles collections to the United States Department of Commerce 
 19.9   shall exclude this amount from the sales and motor vehicle 
 19.10  collections.  ~~Sales tax and~~ Sales tax on motor vehicles ~~revenues~~ 
 19.11  revenue received from political subdivisions must be reported as 
 19.12  intergovernmental grants or similar intergovernmental revenue.  
 19.13  The amount of the sales tax and sales tax on motor vehicles paid 
 19.14  by state agencies must be reported as reduced state expenditures.
 19.15     Sec. 20.  [TRANSFER.] 
 19.16     The commissioner of finance shall transfer money in the 
 19.17  health care access fund as of July 1, 2000, to the MinnesotaCare 
 19.18  subsidized health insurance account in the general fund. 
 19.19     Sec. 21.  [REPEALER.] 
 19.20     (a) Minnesota Statutes 1998, sections 16A.724; 16A.76; 
 19.21  62T.10; 144.1484, subdivision 2; 295.50, subdivisions 1, 2, 2a, 
 19.22  3, 6, 6a, 7, 9b, 9c, 10a, 10b, 12b, 13, 14, and 15; 295.51; 
 19.23  295.52, subdivisions 1, 1a, 2, 3, 4, 4a, and 6; 295.53, 
 19.24  subdivisions 2, 3, and 4; 295.54; 295.55, subdivisions 1, 4, 5, 
 19.25  6, and 7; 295.56; 295.57, subdivisions 1, 2, and 3; 295.58; 
 19.26  295.581; 295.582; and 295.59; Minnesota Statutes 1999 
 19.27  Supplement, sections 13.99, subdivision 86b; 295.50, subdivision 
 19.28  4; 295.52, subdivisions 5 and 7; 295.53, subdivision 1; 295.55, 
 19.29  subdivisions 2 and 3; and 295.57, subdivision 4, are repealed.  
 19.30     (b) Minnesota Statutes 1998, section 290.191, subdivision 
 19.31  4, is repealed. 
 19.32     Sec. 22.  [EFFECTIVE DATE.] 
 19.33     Sections 1, 3 to 13, 20, and 21, paragraph (a), are 
 19.34  effective July 1, 2000.  Section 2 is effective January 1, 
 19.35  2000.  Sections 14 and 15 are effective for taxable years 
 19.36  beginning after December 31, 1999.  Sections 16, 17, and 21, 
 20.1   paragraph (b), are effective for taxable years beginning after 
 20.2   December 31, 2000.  Sections 18 and 19 are effective for sales 
 20.3   occurring after June 30, 2000.