No comparable provision.

Section 1.  Benefits of Participation; Expenditure Type Reporting.  Modifies the requirements for the monetary benefit found in performance standard measures program by requiring that in 2012 only, a county or city with a population over 2,500 must also participate in the expenditure type reporting under 471.74 in order to be eligible.

No comparable provision.

Section 2.  Career and Technical Levy.  Eliminates the levy cap on the career and technical levy and eliminates the proration language allowing the levy to rise to the statutory formula level.

No comparable provision.

Section 3.  Building Lease Levy.  Extends by 11 years the authority for school districts that are members of the “Technology and Information Education Systems” joint board to levy under the building lease levy for improvements to its buildings and land.  This section also authorizes school districts that are members of the St. Croix River Education District to enter into a lease purchase agreement for a building and land and use the building lease levy to pay costs of the agreement.  This authority is for 15 years.

Section 1. Tax credit for property in bovine tuberculosis management zone.  Allows the expired bovine TB credit to be continued within the bovine TB management zone (which is an area within the modified accredited zone where the original credit applied).  Provides that the credit will expire when the Board of Animal Health discontinues all required bovine TB activities in the zone.  For taxes payable in 2012, the credit will be in the form of a check issued by the county. 

No comparable provision.

Section 2. State general levy.  For taxes payable in 2013, freezes both the commercial-industrial and seasonal- recreational portions of the state general levy at their pay 2012 levels, minus an additional $54.8 million from the commercial-industrial portion to eliminate any shifting due to the partial exclusion provided in section 3.  Provides for both portions of the state general levy to be phased out over a 12-year period beginning with taxes payable in 2014.

Section 4. State general levy.  Sets the state general levy base amount for commercial-industrial property at $742 million and at $41.2 million for seasonal recreational property for taxes payable in 2013 through 2016.  Beginning with taxes payable in 2017, both levies are reduced until the tax is eliminated in taxes payable 2026.

Section 3. Commercial-industrial tax capacity.  Provides that the class rate on the first $150,000 in value of each commercial-industrial property is reduced by 70 percent for purposes of the state general levy.

No comparable provision. 

Section 4. State general tax.  Eliminates the 95/5 split of the state general levy between commercial-industrial property and seasonal recreational property, since each property type’s levy is specified separately in section 2.

Section 5. Same.  Minor differences in language. 

[H.F. No. 1954 passed to Ways and Means] – similar, but only applies to cities and counties with over 5,000 population.

Section 6.  Notice of Levy Budget Hearing; Expenditure Type Reporting.  Requires all counties and cities with a population of more than 2,500 to provide to the county auditor the municipal Web site where the public is able to access budget information and requires that the published notice for the budget hearing include a statement that budget information is on the municipal website.

[H.F. No. 1954 passed to Ways and Means] – similar, but only applies to cities with over 5,000 population.

Section 7.  Truth in Taxation Notice; Expenditure Type Reporting.  Requires that the notice clearly state for each county and each city with a population of more than 2,500, budgetary information is available on the municipal website.

Section 5. Rate on delinquent property taxes.  Sets the interest rate for delinquent property taxes to the prime rate plus 2 percent, beginning January 1, 2013. Under current law, the rate is set to the prime rate, subject to a minimum of 10 percent and a maximum of 14 percent.  The interest rate applies to the unpaid property tax itself, plus any penalties that have been incurred.

No comparable provision. 

Section 6. Composite judgment.  Provides that the interest rate determined under section 5 applies to composite judgments confessed on or after January 1, 2013.

No comparable provision.   

Section 7. Renter property tax refund; rent constituting property taxes.  Reduces the percent of rent constituting property taxes used in calculating the property tax refund for renters from 17 percent to 15 percent.  Effective for refund claims filed in 2012 and thereafter based on rent paid in 2011 and thereafter.

Background.  The percent of rent constituting property taxes was reduced from 19 percent to 15 percent for 2010 refunds based on rent paid in 2009 only under the June 2009 unallotment.  This reduction was subsequently enacted into law in Laws 2010, 1st Special Session chapter 1.  Laws 2011, First Special Session chapter 7, reduced the percentage to 17 percent effective for refunds based on rent paid in 2011 and thereafter.

No comparable provision. 

Section 8. Rent constituting property tax; manufactured homes.  Reduces the percent of rent constituting property taxes for rent paid on the site on which a manufactured home or park trailer taxed as a manufactured home is located from 17 percent to 15 percent.  Effective for refund claims based on rent paid in 2011 and following years.

No comparable provision. 

Section 9. Renter property tax refund; senior and disabled renters.  Provides a new schedule for senior and disabled renters (under current law both senior/disabled and nonsenior/nondisabled renters are on the same schedule).  Decreases the maximum household income eligible for a refund from $54,619 under current law to $40,000.  Retains the current law maximum refund of $1,550 for claimants with household incomes under $26,010, and reduces the maximum refund allowed for claimants with household incomes from $26,010 to $40,000.  Effective for refunds based on rent paid in 2011 and following years.

No comparable provision. 

House section 26 increases the targeted refund percentage from 60 percent to 90 percent for taxes payable 2012 only.

Section 8.  Targeting Property Tax Refund.  Modifies the formula for the targeting property tax refund.  Currently, the refund formula is 60 percent of the increase over the greater of (1) 12 percent of the previous year’s tax or (2) $100.  This section increases the factor from 60 percent to 75 percent beginning with refunds based on taxes payable in 2012. 

Section 10. Renter property tax refund; nonsenior/nondisabled renters.  Provides a new schedule for nonsenior/nondisabled renters.  Decreases the maximum household income eligible from $54,619 under current law to $25,000.  Decreases the maximum refund allowed from $1,550 to $1,000, and increases the copayment percentage for all claimants.  Effective for refunds based on rent paid in 2011 and following years.

No comparable provision. 

Section 11. Property tax refund; inflation adjustment.  Eliminates the inflation adjustment of the renter property tax refund schedule, effective for both the senior/disabled and nonsenior/nondisabled schedules.  (The inflation adjustment is retained for the homeowner PTR schedule.)

No comparable provision. 

Section 12. Renter PTR; appropriation.  Modifies the open appropriation for renter property tax refund claims to apply to claims under the new split senior/disabled and nonsenior/nondisabled schedules.

No comparable provision. 

Section 13. Senior deferral interest.  Eliminates the interest accrual on property taxes deferred under the senior deferral program, effective July 1, 2013.  Interest accrued prior to July 1, 2013, would remain payable following termination of a deferral.

No comparable provision. 

Section 14. Senior deferral.  Eliminates a reference to interest under the senior deferral program (relating to payment upon termination of participation), given section 13’s elimination of the interest payment.

No comparable provision. 

Section 15. Occupation tax; other ores.  Lowers the mining occupation tax on nonferrous metals from 2.45 to 1.45 percent of taxable income.

No comparable provision. 

Section 16. Tax imposed.  Increases the mining net proceeds tax on nonferrous metals from two to three percent of the net proceeds.

No comparable provision.

Section 17. Distribution of nonferrous metals taxes (within taconite assistance area).  Broadens the allocation of the nonferrous metals taxes to include the city or town where the concentrating takes place.  Allocates 50 percent of the proceeds based on mining and extracting and 50 percent on the basis of where the ore is concentrated.  Lowers the percentage of the funds that are provided to the Douglas J. Johnson economic protection trust fund from five to three percent of the total and increases the percentage of funds that are set aside from the taconite environmental protection fund from five to seven percent of the total.

No comparable provision. 

Section 18. City or town where quarried or produced (taconite production tax).  Allocates nine cents per taxable ton of the taconite production tax, instead of four cents per taxable ton, to the cities and organized townships affected by the location of a taconite mine pit.  Eliminates the requirement that this money must be evenly split among infrastructure improvements and cooperative projects.  Eliminates the requirement that a municipality receiving a distribution under this section must annually report on its projects to the Iron Range resources and rehabilitation board (IRRRB).

No comparable provision. 

Section 19. School district distribution of taconite production tax.  Raises the school district distribution of the taconite production tax from 23.15 cents per taxable ton to 26.15 cents per taxable ton (the 23.15 cents per ton include 3.43 cents for the taconite schools, 4 cents for the school buildings maintenance fund and 15.72  for school districts within the taconite relief area).  Raises from 4 to 7 cents the amount per taxable ton from each facility that must be dedicated to building maintenance and repairs.  Splits the distribution of the Northshore Mining Company proceeds among three school districts (St. Louis County schools 3/7 of the total; Lake Superior schools 3/7 of the total; and Ely schools 1/7 of the total).  The prior split excluded Ely and was based on the relative share of pupils in the St. Louis County schools and the Lake Superior schools.

No comparable provision. 

[H.F. No. 1954 – passed to Ways and Means] – similar, but only applies to cities and counties with over 5,000 population and does not have the reporting requirement in subdivision 3, paragraph (b), or the incentive in subdivision 5.

Section 9.  Expenditure Type Reporting.  Subdivision 1 provides a purpose statement.

Subdivision 2 defines a "municipality" and "population."

Subdivision 3 requires that a municipality publish on its Web site three years of previous and one year of current budgetary information on both revenues and expenditures.  The information must be organized by function and by expenditure type and must be published by July 31.  The final adopted budget must be published on the Web site within 14 days after its final adoption.

Subdivision 4 provides alternative publication provisions for municipalities without a Web site.

Subdivision 5 provides an incentive for participation in 2012; a city or county that complies with this section and the reporting required under the standard measures program will be entitled to the monetary benefit / incentive of .14 per capita not to exceed $25,000.

Subdivision 6 clarifies that failing to comply with this section in 2013 and thereafter will result in withholding of state-aid road funding, local police and firefighters relief association amortization state aid, local government aid, and county program aid.

Section 20. City aid base.  Provides an additional $12,000 in city LGA in calendar year 2013 only to a city with:

• a 2010 population less than 100 but a population growth rate between 2000 and 2010 of more that 55 percent; and
• more than 15 percent of its taxable property value classified as commercial or industrial.

The only city that qualifies is the city of Tamarack.

No comparable provision. 

Section 21. City aid distribution.  Freezes the starting point for calculating the maximum increases and decreases in the 2013 and 2014 LGA formula to the 2012 LGA. Beginning in pay 2015, the previous year’s aid payment will be used in calculating minimum and maximum increases.

Section 10.  Local Government Aid (part).  Beginning in pay 2014, the previous year’s aid payment will be used in calculating minimum and maximum aids.

Section 22. Aid payment in 2013 (cities).  Sets the 2013 aid payments to cities with a population of 5,000 or more to their 2012 aid amounts.  Sets the 2013 aid payments to cities with a population under 5,000 to the greater of (1) their 2012 aid payment or (2) what they would otherwise get in 2013 under current law.  In addition, the city of Tamarack receives its extra 2013 aid amount of $12,000 under section 20.

Section 10.  Local Government Aid (part).  Freezes a city’s 2013 local government aid at amount equal to their 2012 distribution. 

No comparable provision.

Section 11.  Local Government Aid; Appropriation.  Updates the appropriation of local government aid to reflect the 2013 freeze.

Section 23. Tax; payment of expenses (Cook-Orr Hospital district).  Modifies the use of the portion of the Cook-Orr Hospital district property tax currently dedicated to ambulance acquisition.  Allows this portion of the tax to also be used to fund attached and portable equipment used in the ambulances and to fund ambulance parts and replacement parts.

Requires that this portion of the special district’s property tax levy be split evenly between the Cook area ambulance district and the city of Orr to fund the allowed ambulance costs.

S.F. 2136 (policy/technical and nonbudget bill.) Senate does not require portion of levy to be split evenly between Cook/Orr.

Section 24. Effective date change.  Allows farmers in Marshall county who were forced to move away from their farms due to flooding in 2009 to continue to receive agricultural homestead classification on the farmland indefinitely, provided they continue to reside in Minnesota within 50 miles of the land.  This provision was originally adopted in a 2010 law, but on a temporary (two-year) basis, which is due to expire for taxes payable in 2013.

No comparable provision. 

Section 25. Additional city aid payment in 2012.  Provides an additional $12,000 aid payment in 2012 only to a city with:

• a 2010 population less than 100 but a population growth rate between 2000 and 2010 of more that 55 percent; and
• more than 15 percent of its taxable property value classified as commercial or industrial.

The only city that qualifies is the city of Tamarack.  This payment is made from an appropriation from the general fund but will be paid with the 2012 LGA payment.

No comparable provision. 

Section 26. Supplemental targeting refund.  Provides that for taxes payable in 2012 only, the state will refund 90 percent of the amount that any homeowner’s tax increased by more than 12 percent over the pay 2011 amount, provided that the increase was more than $100.  Current law provides for a refund of 60 percent of that amount.  Eligible taxpayers would not have to file for the increased refund amount—the Department of Revenue would recompute each refund based on the original refund claim. 

Section 14. Administration of Targeting Property Refund.  Directs the Commissioner of Revenue to recalculate the targeting property tax refund using 75 percent of the property tax increase exceeding 12 percent of income instead of 60 percent.  Section 8 of the Senate bill increases the targeting percentage from 60 to 75 percent permanently beginning with refunds based on taxes payable in 2012.

Section 27. Administration of 2012 property tax refund claims; renters.  Directs the commissioner of revenue to recalculate claims for 2012 renter property tax refunds to reflect the reduction in the percent of rent constituting property taxes from 17 percent to 15 percent in sections 7 and 8, and the changes to the renter schedule provided in sections 9 and 10.  Requires the commissioner to notify claimants whose refunds are recalculated that the recalculation was mandated by action of the 2011 Legislature.

Background. By January 31, 2012, landlords were required to issue form CRP to renters for use in claiming the renter property tax refund.  Form CRP reports on line 1 the dollar amount of rent paid, and on line 3 the rent multiplied by the 17 percent, which equals the percent constituting property taxes.  Renters are instructed to use the amount on line 3 in filling out form M-1PR, the claim form for property tax refunds.  The Department of Revenue would then recalculate the M-1PR claim as if the line 3 amount had been rent multiplied by 15 percent, rather than 17 percent, and calculate the new refund amount using the parameters of the revised schedules for senior/disabled or nonsenior/nondisabled renters.

No comparable provision. 

Section 28. Holding of property for economic development.  Temporarily increases the allowable holding period for property held by a political subdivision for later resale for economic development purposes from 9 years to 11 years, for property located in the metropolitan area, or in a city of 5,000 or more outside the metropolitan area.  (For other cities, the maximum allowable period is 15 years.)  During the holding period, the property is exempt from taxation.  Effective for taxes payable in 2013 and thereafter.  The temporary increase in the allowable holding period expires December 31, 2015.

S.F. 2136 (Policy/technical and nonbudget bill.) Similar. Senate extends holding period from 9 to 10 years for property located in the metropolitan area or city with 5,000 or more outside the metropolitan area. Effective for taxes payable in 2013 and thereafter.

Section 29. Truth in Taxation Task Force.  Establishes a task force to study and make recommendations on the design and content of Truth-in-Taxation statements, with a report due on December 15, 2012.  Provides that the task force is to be co-chaired by the chairs of the House Property Tax Division and the Senate Taxes Committee, with six legislative members and five nonlegislative members.  Provides that the task force will utilize existing legislative staff, and requires the Department of Revenue to provide technical assistance.

No comparable provision.

Section 30. Tax exemption; new residential construction in flood-damaged cities.  Allows border cities damaged by flooding in 2009 and 2010 to elect to allow newly-constructed residential properties to be exempt from property taxation for two years.  The exemption is limited to $200,000 for a single family home, duplex, or triplex, or $20,000 per unit for multi-family housing.  The program would affect construction begun between January 1, 2012, and December 31, 2013.  In addition, a parallel program is created providing a two-year exemption for the value added by improvements to existing residential structures, if a city elects to participate.

Background. A tax exemption program for new residential construction (but not improvements to existing structures) has been in place for these same cities since 2010, but expired as of December 31, 2011.  The expiring program provided for state reimbursement for the cost of the exemption.  The program authorized under this section does not provide for state reimbursement.

No comparable provision. 

No comparable provision.

Section 12. Career and Technical Levy Limitation.  Maintains the levy cap for taxes payable in 2012 only, so that certified levies do not need to be recalculated.

No comparable provision.

Section 13.  Lease Levy; Administrative Space.

Subdivision 1 permits Independent School District No. 656, Faribault, to use their lease levy authority to pay for the lease of administrative space rather than instructional space provided that the lease of administrative space is less expensive than leasing instructional space.

Subdivision 2 permits Independent School District No. 284, Wayzata, to use their lease levy authority to pay for the lease of administrative space rather than instructional space provided that the lease of administrative space is less expensive than leasing instructional space.

No comparable provision.

Section 15.  Repealer.  Repeals the state general levy for taxes payable in 2026 and thereafter.          

Section 1. Angel credit; definitions.  Provides a new definition of “liquidation event” as a conversion of a qualified investment to cash, cash and other considerations, or any other form of debt or equity interest.

Section 1. Different.  Senate language defines "qualified greater Minnesota business" as a qualified small business certified by the Department of Employment and Economic Development (DEED) under the criteria in section 2.

Section 2. Angel credit; qualifying small business.  Makes several changes in the requirements that a small business must satisfy for the business and investments in it to qualify under the angel investment credit:

• Extends the number of years in which a business may have been in operation from ten to 20 in the case of businesses engaged in researching, developing, or producing drugs that require U.S. Food and Drug Administration approval;
• Prohibits the business from having its securities trade on a public stock exchange prior to the investment being made and within 180 days of the date of the investment; and
• Prohibits the business from having a liquidation event, defined in section 1, within 180 days of the date the investment qualifying for the credit was made.

Section 2. Different.  Authorizes businesses to apply to DEED for certification as a qualified greater Minnesota business.  Defines “greater Minnesota” as the area of the state outside the seven-county metro area, but including the cities of Hanover, New Prague, Northfield, and Rockford, which are partly in the seven-county metro area and partly in other counties.  To qualify as a greater Minnesota business, a business must have its headquarters and at least 51 percent of its employees and payroll in greater Minnesota.

Section 3. Angel credit; annual limit.  Increase the annual cap on angel credit allocations from $12 million to $17 million, effective for tax years 2012 to 2014.  Retains the present law sunset of the credit after 2014.

Section 4 increases the credit rate for investments in greater Minnesota businesses to 40 percent if less than 30 percent of credits are awarded for investments in greater Minnesota businesses.

Section 3.  Different. Increases the annual cap on angel credit allocations from $12 million to $14 million, effective for tax years 2012 to 2014.  Retains the present law sunset of the credit after 2014. 

Increases the credit rate for investments in qualified greater Minnesota businesses from 25 percent to 40 percent.

Section 4. Promotion of angel credit in greater Minnesota.  Requires the commissioner of DEED to develop a plan to promote usage of the angel credit in greater Minnesota, with the goal of awarding 30 percent of credits to investments in greater Minnesota businesses during the second half of calendar year 2013 and following years.  If the 30 percent target is not achieved in the second half of 2013 or any following year, then the credit rate is increased from 25 percent to 40 percent for the next calendar year for investments in greater Minnesota businesses.  Defines “greater Minnesota business” as a business that has its headquarters and at least 51 percent of its employees and payroll outside the seven-county metro area, but includes the entire area of cities that are partly in the seven-county metro area, and partly in other counties (Hanover, New Prague, Northfield, and Rockford).

Different.  Section 3 increases the credit rate for all qualifying investments in greater Minnesota businesses to 40 percent, using the same definition of greater Minnesota businesses. 

No comparable provision

Section 4.  Revocation of Credits.  Provides language to add qualified greater Minnesota businesses to the provision in current law requiring businesses to repay an amount of credits awarded if a business fails to meet the employment and payroll requirements in the five years following the year in which an investment was made.

Section 5. Angel credit, permitted disclosure.  Modifies the exemption from the Data Practices Act for disclosure of information on the businesses that receive investments qualifying for the angel credit.  Under present law, only the name of the qualified business may be disclosed.  This section would allow the mailing address, telephone number, e-mail address, contact person’s name, and industry type to also be disclosed.

Section 5. Same

No comparable provision

Section 6.  Report to Legislature.  Adds language to require DEED to include information on the number of minority or women-owned qualified small businesses in its annual report to the legislature on the angel investment program.

Section 6. Technology corporate franchise tax certificate transfer program.  Establishes a technology tax benefits transfer program that allows emerging biotechnology companies to sell their NOL carryovers to other corporations that can use them to reduce their Minnesota taxes.

Definitions.  Defines the following terms:

• “Biotechnology” – is defined as knowledge, products, and technology related to biological systems.
• “Biotechnology company” – is an emerging corporation with a Minnesota headquarters and proprietary intellectual property that engages in research, development or production of biotechnology for commercial or public purposes.  In addition, at least one- half of the company’s full-time employees must be located in Minnesota and it must have received at least $2.5 million in private investment.
• “Full-time employee” – is defined as an employee of or a partner of a new or expanding biotechnology company who works at least 35 hours per week and who receives group health benefits from the biotechnology company.  The term excludes independent contractors and consultants who are not employees.
• “Maximum annual credit limit” – sets the annual dollar limit, per fiscal year, allowed under the program.  This amount is $10 million for fiscal year 2013, $15 million for fiscal year 2014, $30 million in fiscal years 2015 and 2016, and $60 million per year after that.
• “New or expanding” – is defined as biotechnology company that has not been in operation for more than ten years, has fewer than 250 full-time employees on June 30th of the year and has a minimum number of full-time employees:
  • at least one full-time employee for a corporation that has been incorporated less than three years,
  • at least five full-time employees for corporations incorporated for at least three, but less than five, years, or
  • at least ten full-time employees for all other corporations.

Qualifying corporations and computation of the transferrable tax benefit.  Biotechnology companies seeking to sell their NOL carryovers must apply to and obtain approval from DEED to do so.  The corporation must certify that it intends to continue operating in the state and DEED can require the corporation to enter a written agreement regarding maintenance of its headquarters or base of operations in the state or other conditions.  A $15 million lifetime limit applies to the amount of tax benefits that each corporation can sell/transfer.  A corporation may not sell its tax benefits if it:

• had positive net operating income in either of the two previous years for financial reporting purposes; or
• is 50 percent or more owned or controlled by another corporation that had positive net operating income in either of the two previous years for financial reporting purposes.

Sales of the tax benefits must equal at least 75 percent of the calculated amount of the tax benefit.  The tax benefit amount is calculated by multiplying the NOL carryover by the transferor corporation’s Minnesota apportionment percentage (i.e., the percentage used to determine what share of its income is subject to Minnesota tax) and by 9.8 percent, the statutory tax rate.  The resulting amount is then allowed as a credit against the purchasing (transferee) corporation’s Minnesota tax under section 12.

Annual limit.  The total amount of the tax benefits that may be transferred in any fiscal year is limited to $10 million in fiscal year 2013, $15 million in fiscal year 2014, $30 million per year in fiscal years 2015 and 2016, and $60 million per year in fiscal years 2017 and 2018.  If the applied for amount exceeds the cap, DEED is to allocate the  tax benefits as follows to ensure that the total amount is within the annual limit:

• Applicants to transfer/sell $250,000 or less receive the full amount.
• Applicants for more than $250,000 receive $250,000 and all applications for amounts over $250,000 are proportionately reduced to keep the total within the limit for the year.  If the reduction of amounts over $250,000 is insufficient, then all amounts would be proportionately reduced.

Recapture.  DEED is directed to develop a form agreement that each business must enter to participate in the program that provides for recapture of all or a part of the tax benefits from recipient corporations that fail to use the payments received in exchange for the tax benefits as required (e.g., under an agreement required by DEED) or that fail to maintain their headquarters or base of operations in Minnesota.

Program evaluation.  The commissioner of revenue is directed to contract for an evaluation of the program, which is to be submitted to the legislature by January 2017.

Sunset.  The program expires with the allocation for fiscal year 2018.

No comparable provision

No comparable provision

Section 7. Internal Revenue Code. Updates the reference in Minnesota Statutes to the most recent version of the Internal Revenue Code for purposes of conforming to federal law enacted in February 2012, which allowed eligible employees and their surviving spouses to transfer up to 90 percent of airline bankruptcy-related payments to a traditional IRA and claim a refund of the federal taxes they paid on such funds. Those employees who exercised the Roth IRA rollover opportunity prior to the 2012 Act are also eligible to transfer up to 90 percent of those Roth IRA funds to a traditional IRA and claim a refund of the federal taxes they paid on such transferred funds.

Section 7. FOCs filing requirement.  Eliminates the exemption for FOCs from the corporate return filing requirement.  The bill effectively subjects FOCs to tax on the same basis as other corporations.

Effective date:  Tax year 2012

No comparable provision

No comparable provision. (H.F. 2093, in the Committee on Ways and Means, contains the same provision with regard to contractor withholding.)

Section 8. Withholding Tax. Strikes language referencing the contractor withholding requirement repealed in a later section.

No comparable provision

Section 9. Net Income. Updates the reference in Minnesota Statutes to the most recent version of the Internal Revenue Code and strikes obsolete language for purposes of defining Minnesota Net Income for the federal conformity adopted in section 7.

No comparable provision

Section 10. Additions to Federal Taxable Income. Adds language to conform Minnesota tax law to the federal law pertaining to the increased standard deduction for married filers, effective for tax year 2012 only.

No comparable provision

Section 11. Subtractions from Federal Taxable Income. Allows an income tax subtraction of 46 percent of military pension or other retirement pay beginning in tax year 2013.

Section 8. Additions to FTI for corporations.  Repeals the corporate franchise tax additions to federal taxable income for FOCs deemed dividends.  Sections 15 and 17 repeal FOCs deemed dividend treatment.  This provision eliminates the corresponding addition to income for the deemed dividend.

Effective date:  Tax year 2012

No comparable provision

Section 9. Subtractions from FTI for corporations.  Corrects cross references in the subdivision providing subtractions from FTI for corporations to reflect the changes made in section 8 and allows a subtraction to a corporation that sells NOLs under section 6 for the amount it received from the purchaser (to the extent it was included in federal taxable income). 

Effective date:  Tax year 2012

No comparable provision

Section 10. Conforming change.  Provides that a corporation may not deduct NOLs that were transferred or sold under section 6.

No comparable provision

No comparable provision

Section 12. Internal Revenue Code. Updates the reference in Minnesota Statutes to the most recent version of the Internal Revenue Code.

Section 11. Income tax credit for employment of veterans.  Allows a state income tax credit for taxpayers who employ one or more qualified veterans in Minnesota.  The state credit equals 150 percent of the federal work opportunity credit, to the extent the federal credit is claimed for employment of qualified veterans (under present federal law, the federal credit is available only for employment of qualified veterans, but in the past it has been allowed for a variety of groups of employees).  The credit would be available to all employers subject to the individual income or corporate franchise tax.

For each qualified veteran hired, the federal credit equals 40 percent of a capped amount of wages paid during the first year of employment, with the amount of qualifying wages set at different levels for different categories of veterans.

Veterans who received food stamps for at least three months in the 15 months prior to the hiring date, or who were unemployed at least 4 weeks, but less than 6 months in the last year:

• maximum federal credit of $2,400 (first $6,000 of wages);
• maximum state credit of $3,600

Disabled veterans hired within one year of discharge from the military:

• Maximum federal credit of $4,800 (first $12,000 of wages)
• maximum state credit of $7,200

Veterans who are not disabled and who were unemployed for at least six months in the 12 months prior to the hiring date:

• Maximum federal credit of $5,400 (first $14,000 of wages)
• Maximum state credit of $8,100

Disabled veterans who were unemployed for at least six months in the 12 months prior to the hiring date:

• Maximum federal credit of $9,600 (first $24,000 of wages)
• Maximum state credit of $14,400

For each veteran hired, the federal credit is currently in effect for veterans who are hired after November 11, 2011, and before December 31, 2012.  The state credit proposed in this section would remain in effect without regard to the December 31, 2012, expiration of the federal credit.  For veterans hired after December 31, 2012, the state credit would continue to be calculated using the definitions and parameters of the current federal credit.  If the credit allowed exceeds the taxpayer’s corporate franchise and individual income tax liability for the year, the excess may be carried forward for up to ten years.

Effective date: Tax year 2012.

No comparable provision

Section 12. Tax credit.  Allows the amount of the transferred tax benefits under section 6 as a credit against tax liability for the recipient or purchasing corporation.  The credit may be allocated to any member of the unitary business.

No comparable provision

Section 13. Property tax credit; corporate franchise tax.  Allows a property tax credit to reduce the corporate franchise tax, including the alternative minimum tax.  The credit equals the lesser of (1) the property tax paid on Minnesota real property that is owned by a member of the unitary business or (2) 7.84 percent of the FOC income of the unitary business, as computed under present law.

Effective date:  Tax year 2012

No comparable provision

No comparable provision

Section 13. Credit allowed. Increases the amount of the monthly credit for current military service in a combat zone from $120 to $240 per month.  Effective beginning tax year 2013.

No comparable provision

Section 14. Qualified individual. Strikes the definition of “qualified individual” for purposes of the military retirement pay credit repealed in a later section. Effective beginning tax year 2013.

Section 14. Research and development credit.  Increases the second tier rate of the research and development credit from 2.5 percent to 4.5 percent.  The second tier rate applies to qualifying expenditures in excess of $2 million.

Effective date:  Tax year 2012

No comparable provision

No comparable provision

Section 15. Definitions. References the definitions of “placed in service” and “qualified rehabilitation expenditures” to their meaning given in section 47 of the Internal Revenue Code. For purposes of the Minnesota credit, “Federal credit” is defined as 20 percent of the qualified rehabilitation expenditures with respect to any certified historic structure for a taxable year.

No comparable provision

Section 16. Applications; Allocations. Replaces “expenses” with “expenditures” for purposes of the historic structure credit and provides for a decision of the State Historic Preservation Office of the Minnesota Historical Society regarding eligibility for a state credit to be challenged as a contested case under the state administrative procedure statutes. Updates the references to the commissioner of revenue in the statute for consistency with references in other sections.

No comparable provision

Section 17. Partnerships; Multiple Owners. Adds language to allow credits granted to corporate entities to be passed through to partners, members, shareholders, or owners of a corporate entity according to any executed agreement between relevant parties.

No comparable provision

Section 18. Sunset. Extends the sunset date of the state historic structure rehabilitation credit from fiscal year 2015 to fiscal year 2022. The State Historic Preservation Office is authorized through 2024 to issue credit certificates based on allocation certificates issued before fiscal year 2022. The requirement to report the economic impact of the historic structure rehabilitation credit or grant to the chairs and ranking minority members of the Senate and House tax committees is extended through 2025, or the year after the year all allocation certificates have been cancelled or resulted in credit certificates, whichever is earlier.

No comparable provision

Section 19. Definitions. Provides a subtraction from alternative minimum taxable income for the new subtraction for military pension or other retirement pay.

Section 15. FOC deemed dividends.  Eliminates the authority to exclude the income and apportionment factors of FOCs from the combined report and eliminates the deemed dividend deduction for 80 percent of FOC income.

Effective date:  Tax year 2012

No comparable provision

Section 16. REIT dividends.  Excludes real estate investment trust (REIT) dividends from the dividend received deduction allowed to corporations to the extent that the REIT dividends do not qualify for the dividend received deduction under the federal corporate tax.

Effective date:  Tax year 2012

No comparable provision

No comparable provision

Sections 20-21. Internal Revenue Code. Update the reference in Minnesota Statutes to the most recent version of the Internal Revenue Code in the property tax refund and estate tax chapters.

Section 22. Tax Credit. See House Art. 5, section 3.

Repealer.  Repeals the modification to the alternative minimum tax for FOCs.

No comparable provision

No comparable provision (H.F. 2093, in the Committee on Ways and Means, contains the same provision with regard to contractor withholding.)

Section 23. Repealer. Repeals the military retirement pay credit, effective tax year 2013, and repeals the contractor withholding requirement.  Sections 11 and 19 allow a subtraction for military retirement pay.

Section 1. Sales and use tax.  Eliminates the accelerated remittance schedules for vendors with annual sales tax collections of at least $120,000 for all months except for June collections.  Effective for all payments due after July 1, 2012.  These early remittance requirements are currently scheduled to blink off at that time due to the budget surplus in the February 2012 forecast.

Section 1. Same, except Senate effective date is for payments due after June 30, 2012. 

No comparable provision.

Section 2.  Exemptions.  Excludes payments by an entity for laboratory services to examine and report results for specimen collected outside the state from gross revenues subject to hospital, surgical, or health care provider taxes used to pay for the MinnesotaCare program.  Requires the entity claiming the exemption to keep adequate records demonstrating that the specimen was collected outside the state, so that the commissioner can ensure that the correct amount of tax is paid.

No comparable provision.

Section 3.  Retail Sale.  Adds payments for rent-to-own or lease-to-own used vehicles that may be returned at any time without penalty to the definition of a “retail sale,” so that sales tax is levied on each payment and is due at the time of each periodic payment on the full value of the lease, instead of at the time of initial lease. 

No comparable provision.

Section 4.  Drugs; Medical Devices.  Exempts medical devices purchased in transactions covered under Medicare and Medicaid.  Clarifies that single patient use items are included in the definition of “durable medical equipment” and that “repair and replacement parts” include single patient use items.  Adds clarifying language to determine when a transaction is considered covered by Medicare or Medicaid. 

No comparable provision.

Section 5.  Accessories and Supplies.  Exempts accessories and supplies required for effective use of durable medical equipment for home use only or when purchased in a transaction covered by Medicare or Medicaid not already exempt under current law.

Section 2. Capital equipment; sales tax.  Allows the existing refund of sales taxes paid on capital equipment as an upfront exemption for small businesses as defined in chapter 645.  A small business qualifies for the upfront exemption if it is not an affiliate or subsidiary of a business dominant in its field of operation, and either:

(1)  has 20 or fewer full-time employees; or

(2)  in the preceding fiscal year has not had more than the equivalent of $1,000,000 in annual gross revenues; or

(3)  if the business is a technical or professional service, did not have more than $2,500,000 in annual gross revenues in the preceding fiscal year.

All other businesses must still pay the sales tax on capital equipment and apply for a refund as specified in current law.  Effective for sales and purchases made after June 30, 2012.

Section 6. Similar. Senate language provides that a business qualifies for the upfront exemption if during calendar years 2013 and 2014 it has 20 or fewer full-time employees and it is not an affiliate or subsidiary of a business dominant in its field of operation; and for 2015 it has 50 or fewer full-time employees and it is not an affiliate or subsidiary of a business dominant in its field of operation.  All capital equipment purchases are exempt beginning in 2016.   Effective for sales and purchases made after December 31, 2012.

No comparable provision.

Section 7.  Qualified Data Centers.  Changes the requirements for purchases by a “qualified data center” to be eligible for a sales tax exemption by reducing the requisite cost of construction and investment in technology equipment and software from $50 million within a two-year period to $30 million in a three-year period. 

Section 3. Sales to nonprofits.  Narrows the list of purchases of nonprofits not eligible for a sales tax exemption to allow for the exemption in section 4.

No comparable provision. 

Section 4. Established religious orders.  Excludes from sales tax the sale of lodging and taxable food and beverages between an established religious order and an affiliated higher education institution.  Defines “affiliated” for purposes of this subdivision.  This provision allows St. John’s Abbey to retain an existing exemption after the governing restructuring between the abbey and St. John’s University that will occur this year.  Effective for sales and purchases made after June 30, 2012.

No comparable provision. 

No comparable provision.

Section 8. Nursing home sales tax exemption. Exempts sales to a certified nursing facility or boarding care home certified as a nursing facility.  The facility must be either a 501(c)(3) tax-exempt organization, or an organization certified to participate in the Social Security medical assistance program that certifies to the Commissioner of Revenue that it does not discharge residents due to inability to pay.

The exemption does not apply to:

• Sales of construction materials purchased as a part of a lump-sum contract or similar type of contract with a guaranteed maximum price covering both labor and materials for use in the construction, alteration, or repair of the facility;
•  Sales of construction materials purchased by the facility or their contractors to be used in constructing buildings or facilities that will not be used principally by the facility;
• Sales of lodging and prepared food, candy, soft drinks, and alcoholic beverages; and
• Leased vehicles, except those leased and used to transport residents and property of the facility.

Effective for sales and purchases made after June 30, 2012.

No comparable provision.

Sections 9-11.  Capital equipment refunds.  Remove references to the refund process for capital equipment purchases, effective when the capital equipment exemption becomes upfront for all purchasers in 2016.  

No comparable provision.

Section 12.  Motor Vehicle Lease Sales Tax Revenue.  Includes sales tax revenue on rent-to-own and lease-to-own used vehicles in the definition of net revenue for purposes of allocation of those proceeds to the transportation funds.

No comparable provision.

Section 13.  Exemptions.  Exempts purchases of vehicles used exclusively as mobile medical units for federally qualified health centers from sales tax, retroactive to 2011.  

Section 5. Use of revenues (Rochester).  Expands the cities specifically enumerated as being eligible for a portion of the $5 million of Rochester’s local sales tax revenue set aside for economic development purposes in surrounding communities to include any other city with a population of at least 1,000 that is:

• within 25 miles of the geographic center of Rochester, and
• is closer to Rochester than to any other nonmetro city with a population of 20,000 or more.

The only city that qualifies is Wanamingo.

S.F. 2136 (Policy/technical and nonbudget bill). Same

Section 6. Rochester lodging tax.  Increases the total local lodging tax authority in the city of Rochester from 5 percent to 7 percent.  Currently the city is only imposing the tax at a rate of 4 percent.  Also delays when the bonds for Mayo Center complex renovations and expansions must be issued in order to be funded by the extra 3 percent lodging tax from the end of 2014 to the end of 2106.

Subd. 1a and 2.  Increases the authorized additional local lodging tax rate used to fund renovation, expansion, and improvement of the Mayo Civic Center complex from 1 percent to 3 percent.

Subd. 2a. Removes a reference to the food and beverage tax repealed in section 10 from the language related to repayment of the Mayo Civic Center complex bonds.

Subd. 3.  Changes the date by which Mayo Civic Center bonds and obligations must be issued in order to be funded from the lodging tax revenue from December 31, 2014, to December 31, 2016.

S.F. 2136 (Policy/technical and nonbudget bill). Same

Section 7. Use of revenues (Central Cities).  Modifies one of the existing allowed uses of the city of St. Cloud share of the Central Cities local sales tax revenues to limit funding to regional community and aquatic centers and related facilities.

SF 2136 (Policy/Technical and Nonbudget bill).  Same

Section 8. Termination of tax (Central Cities).  Allows each city currently part of the Central Cities local sales tax authority to extend the tax in its community from 2018 to 2038, provided the extension is approved by the voters at a general election held by November 2017.  The vote must still list the projects to be funded from the tax extension but the tax does not have to expire for one year before being re-imposed.

S.F. 2136 (Policy/technical and nonbudget bill). Same

Section 9. Use of revenues (Clearwater).  Modifies the use of the local sales tax revenues in the city of Clearwater to include projects at the specified parks and trails.  In 2010 the legislature passed a provision tying the projects to those enumerated in an adopted 2006 city improvement plan; unfortunately the city council had never formally adopted the plan.

S.F. 2136 (Policy/technical and nonbudget bill). Same

Section 10. Repealer.  Repeals the penalty and safe harbor provisions related to the early remittance schedules for sales tax eliminated in section 1.

Also repeals the authority for a one percent Rochester food and beverage tax to fund payment of the Mayo Civic Center complex bonds. This tax has never been imposed.

Section 14. Same, except Senate effective date is for taxes due after June 30, 2012. 

S.F. 2136 (Policy/technical and nonbudget bill). Same

Section 1. Economic development districts. Extends by 18 months, the 2010 jobs bill’s economic development district authority, as extended by the 2011 tax policy bill, from July 1, 2012, through January 1, 2014.

Laws 2010, chapter 216, as amended by Laws 2011, chapter 112, allows economic development districts to be used for any type of project if the following conditions are met:

• The municipality finds the project will create new jobs in the state, including construction jobs, and the project otherwise would not have begun before July 1, 2012, without the assistance
• Construction of the project begins no later than July 1, 2012
• The request for certification is made by June 20, 2012

This section would extend each of these dates by 18 months.  Under prior law and resuming July 1, 2012, economic development districts could only be used for (1) manufacturing, (2) warehousing, (3) research and development, and (4) tourism in selected counties.

No comparable provision. Senate section 9 contains similar language that is specific to the city of Apple Valley. 

No comparable provision.

Section 3.  TIF; Redevelopment District.  Modifies the definition of a redevelopment district by requiring that 50 percent or more of the buildings be structurally substandard.  This is a change from current law which requires that “more than 50 percent” be structurally substandard.

Section 2. User of surplus increments. Extends by 18 months, the 2010 job bill’s expanded authority, as extended by Laws 2011, chapter 112, to spend excess and surplus tax increments, notwithstanding the pooling limits, 5-year rule, and so forth.  Under present law, this authority applies to construction of new or substantial rehabilitation of existing buildings, if:

• Construction begins before July 1, 2011
• The development will create new jobs (including construction jobs)
• The development would not have occurred without provision of the assistance

This authority includes the ability to make equity investments in the development, for example, if it is necessary to obtain financing.  The municipality (usually the city) must approve and must hold a public hearing with published notice (following the same rules as apply to approving a new TIF plan).

This section extends each of those dates by 18 months to January 1, 2014.  The authority to use these increments for housing, which expired on January 1, 2012, would not be extended by this section.

No comparable provision.

Section 3. Additional pooling; foreclosures.  Modifies the exemption to the TIF pooling percentage limits, which was enacted by the 2011 Legislature, allowing an extra 10 percent of a district’s increment to be spent outside of the district for market rate housing (i.e., that does not meet the low-income housing tests under federal tax law) to clarify that the maximum market value limit for the housing is to measured before rehabilitation or reconstruction of the housing.  The market value limits are $200,000 in the metro area and $125,000 elsewhere or 150 percent of the average market value of homes in the city, if that amount is lower.

Section 7. Similar.  Senate language strikes the requirement that the property has been vacant for six or more months and specifies that the mortgage has been foreclosed, the redemption period has expired and the authority or developer agrees to acquire the parcel no earlier than 30 days after expiration of the redemption period. 

Section 4. City of Oakdale.  Modifies the special law for the city of Oakdale, passed by the legislature in 2008 and modified in 2009, granting the city authority to deviate from general law rules with regard to tax increment financing (TIF) districts created in a defined area of the city.  This bill makes two changes in this special law authority:

• The period of time that the city has to establish TIF districts under the special law is extended by two years from 2013 to 2015.
• An exemption is provided to the general law “blight test” rules.  The blight test (essentially a requirement that an area contain “blighting” conditions that legally justify creating a redevelopment TIF district) requires that 70 percent of the parcels in an area be occupied by buildings or other qualifying structures and that 50 percent of the buildings be substandard.  A parcel can be treated as being occupied by a substandard building, if the parcel was occupied by a substandard building that was demolished within three years of certification of the district and if a four-part test is satisfied.  The bill provides special rules for meeting this four-part test:
  • The 3-year time limit between demolition of the building and the certification of the district does not apply.
  • The requirement that private demolition (if done by the property owner rather than the development authority) be done under a development agreement does not apply.
  • The adjustment to original net tax capacity (increasing it for any reduction in tax capacity resulting from demolition of the building) does not apply.  This is consistent with the original special law, which allowed the city to set the original tax capacity at the land value.

Section 8. Same, except that the authority to establish TIF districts under the special law is extended by four years from 2013 to 2017. 

Section 5. City of Apple Valley.  Grants the city of Apple Valley special exceptions from the general law tax increment financing (TIF) rules to help it develop a large area (about 600 acres) that contains sand and gravel pits.  This area is identified by the property tax parcel numbers for land in the area.  The city has about five years (through December 31, 2017) to establish TIF districts in this area. 

Different.  Senate Sections 1-2 and 4-6 establish Mining Reclamation Project Areas under general law.  (See also comparison with House section 6, below.) 

Before establishing districts in the area it would be required to find one or more of the following conditions (a parcel’s area is treated as wholly meeting a requirement if 70 percent of its area meets the requirement, except a 30 percent test applies for the substandard building requirement):

• Peat or other geotechnical difficulties with the soil “impair” commercial development
• Substantial fill is required for commercial development
• Landfills, dumps, or similar conditions
• Quarries (e.g., gravel pits) or similar
• Floodway
• A substandard building, as defined under the TIF blight test under general law, is located on the parcel

Districts created in this areas that would be exempt from the following general law TIF rules:

• These districts could be created as redevelopment districts, even though the area does not meet the blight test or the other bases for permitting creating a 26-year redevelopment district.
• The pooling restrictions (limiting the amount of increment that may be spent outside the area of the district from which it was collected to 25 percent, less administrative expenses) do not apply.  However, the bill requires the increments to be spent only within the designated larger area.  This will give the city flexibility to collect more increments in the easier to develop parts of the area, while spending a larger proportion of them on costs in the more difficult to develop areas.  It could achieve the same effect by creating one large district, but this would constrain how long it could collect increments, since the duration clock would run when the first district is created.  By contrast, the pooling exemption allows the city to create multiple districts over the 5-year period, stretching out how long it collects increments.

The 5-year rule is extended to 10 years.  The 5-year rule limits the amount of time the city has to enter contracts and pay for developments within each TIF district.

Similar, except Senate language allows parcel to be treated as wholly meeting a requirement if 50 percent of its area meets requirement.

Same, except Senate language does not reference “commercial” buildings or infrastructure and Senate established general law.

Same, except Senate language does not reference “commercial” buildings or infrastructure and Senate established general law.

Same, except Senate establishes general law.

Same, except Senate establishes general law

Same, except Senate establishes general law

Same, except Senate establishes general law

Same, except Senate establishes general law

Same, except Senate establishes general law

Same, except Senate establishes general law

Section 6. City of Maple Grove.  Grants special law authority to Maple Grove to apply special rules to TIF districts it establishes in a defined area of the city over the next five years (through December 31, 2017).  Before using this authority, the city must make findings that parallel the findings required of Apple Valley under section 5.

Special TIF rules that apply.  The following exceptions to general law TIF rules would apply to new districts created in the defined area.  Any type of TIF district, except an economic development district or housing district, could be created in the area and qualify for these special rules.

• The five-year rule is extended to ten years.  The 5-year rule limits the amount of time the city has to enter contracts and pay for developments within each TIF district. 
• The requirement that increments be used for decertification does not apply.  The bill exempts districts from the requirement that increments required to be spent on in-district costs after the running of the five-year rule (ten years under the bill) must be used to pay outstanding obligations and, then, the district must be decertified.  The bill does not specify what these increments may be used for after the 10-year period permitted has run.
• Soils districts increments may be spent on infrastructure, not just cleanup costs.  Under general law, soils districts are limited to paying for hazardous waste cleanup and cannot be used to pay for roads, public utilities, and similar infrastructure costs.
• Redevelopment district increments need not be spent on blight correction.

Sections 1-2,4-6.  Mining Reclamation Project Areas. Senate language establishes mining reclamation project areas under general law.  Section 1 includes a municipality undertaking a mining reclamation project within the general definition of “authority.”  Section 2 includes a mining reclamation project area within the general definition of “project.”

Same, except Senate establishes general law

Same, except Senate establishes general law

Same, except Senate establishes general law

Similar.  Senate language also allows up to 25 percent of increments to be used for correcting conditions that qualify as redevelopment or renewal and renovation district expenditures. 

Same, except Senate establishes general law

• A new type of TIF district – a soils deficiency district – with special qualifying rules would be allowed.  This authority roughly mirrors a similar type of district that existed under an old TIF law, which was repealed by the legislature in the 1990s.  To qualify, 80 percent of the area would need to have soils or terrain difficulties with estimated correction costs (basically grading or filling) that exceed the fair market value of the property (but not counting the cost of roads and other public improvements that landowners could be specially assessed for).  These soils deficiency districts would be allowed to collect 21 years of increments and would be limited to spending increments on land acquisition, soils correction, public improvements, and administrative expenses.  These expenditures would qualify if they are made for these types of costs anywhere in the defined area.

Section 4.  Soil Deficiency District.  Defines a soil condition district under general law as a district consisting of a project or portions of a project within which the authority finds by resolution that the following exist:

• parcels consisting of 70 percent of the area of the district contain unusual terrain or soil deficiencies that require substantial filling, grading, or other physical preparation for use and a parcel is eligible for inclusion if at least 50 percent of the area of the parcel requires substantial filling, grading, or other physical preparation for use; and
• the estimated cost of physical preparation of that district, excluding certain road and local improvement costs, exceeds the fair market value of the land before completion of the preparation.

Section 7. Dakota County.  Allows the Dakota County Community Development Agency (CDA) to establish a redevelopment TIF district in the city of West St. Paul.  This district would consist of the parcels of an existing redevelopment district that is required to be decertified in 2012; the original tax capacity of the district is set at $93,239.  The district is treated as a redevelopment district, but it must be decertified in 2017.  (Under general law, a redevelopment district is allowed 26 years of increment, as contrasted with the 5 years allowed to this district.  Alternatively, the bill could be viewed as a 5-year extension of the pre-existing district, since the original tax capacity appears to be set as the level of the decertified district.)

This district would be exempt from the blight test (i.e., the rules that restrict areas that qualify as redevelopment districts) and is provided exemptions for the following limits on the spending of redevelopment district increments:

• Increments could be used for improvements, equipment, and other items that serve decorative purposes or whose cost is at least doubled because of the selection of materials and so forth.  (General law prohibits these uses, if they are placed outside of the TIF district.)
• The requirement that increments be used for blight correction does not apply.
• The pooling rules (percentage limits on how much increment may be spent on activities outside of the TIF district) do not apply.

The district’s captured tax capacity is included for computing state aid formulas (e.g., local government aid, county program aid, education aid, and so forth).

Section 13. Same, except district must be decertified in 2027.

Section 8. City of Bloomington; extension. Authorizes Bloomington and its port authority to extend the duration of TIF District No. 1-1, which contains the Central Station property, through 2035.

Background.  The 2008 Legislature authorized the city to extend the 5-year rule for this district to 10 years.  This district is a redevelopment district, which received its first increment in 2006.  The district would be required to be decertified at the end of 2031 under general law.  The bill, thus, provides a four year extension, allowing 30 years of increment to be collected.

Section 11.  Same, except that the duration of the TIF district is extended through 2038. 

Section 9. City of Bloomington, extension.  Authorizes Bloomington and its port authority to extend the duration of its tax increment financing (TIF) district No. 1-G and the portions of district No. 1-C north of the Mall of America building through 2028.

 Background.  Absent an extension, this district would be required to be decertified in 2018.  Certification of this district was originally requested in 1986 for another site (to the east and south of the Mall of America, often referred to as the Kelley farm site).  Special legislation passed in 1996 allowed the city and port authority to transfer the location of the district from that site to its present site, the former location of the Met Center arena.  The 1996 special law imposes special restrictions on the spending of increments from this district, which were repealed by a special law passed in 2010.

Section 10.  Same, except that the duration of the TIF district is extended through 2038. 

Before granting an extension or authorizing an additional $5 million of expenditures of tax increment, the city would be required to make the statutory but-for finding.

No comparable provision.

Approval of the special law would be required to be made by the city, county, and school district.

Senate language only requires approval by the city. 

House sections 1 and 2 provide authority under general law for this purpose.

Section 12. Brooklyn Park; TIF.  Subdivision 1 extends, by one year, the authority of the Brooklyn Park Economic Authority to spend increment from existing TIF districts to assist in the development of a hotel and an aquatic and performance wellness center.

Section 10. City of Brooklyn Park.  Grants an extension of the 5-year rule for a district in Brooklyn Park through July 1, 2014.  The 5-year rule limits the amount of time the city has to enter contracts and pay for developments within each TIF district.

Section 12. Brooklyn Park; TIF.  Subdivision 2. Same, but House specified governing body in effective date.

House sections 1 and 2 provide authority under general law for this purpose.

Section 9.  Apple Valley, TIF.

 Subdivision 1 authorizes the city of Apple Valley to use tax increment financing from economic development districts to provide improvements, loans, interest rate subsidies, or assistance if the following conditions are met:

       1.  the project will create or retain jobs, including construction jobs in Minnesota;

       2.  construction of the project will not start before July 1, 2012, without the use of increment;

       3.  certification request is made no later than June 30, 2013;

       4.  construction begins no later than July 1, 2013; and

       5.  construction begins no later than July 1, 2013, or December 31, 2012, for a housing project. 

 Subdivision 2 extends by 18 months the city’s authority to spend tax increment under the temporary construction authority.

House sections 1 and 2 provide authority under general law for this purpose.

Section 14.  St. Cloud TIF; Expenditure of Fund Balance.  Authorizes the St. Cloud Economic Development Authority to spend the balance of the increments from TIF District No. 2 within the Central Area Urban Renewal Project area of St. Cloud.  Eligible expenditures include public infrastructure improvements.  Any increment remaining must be spent by December 31, 2015, or distributed as excess increment.

Section 1. Greater Minnesota internship program. 

Subd. 1. Definitions.  Defines “eligible employer,” “eligible institution,” “eligible student,” and “greater Minnesota” for this program.

Subd. 2. Program established.  Requires the Office of Higher Education, in conjunction with DEED, to administer an internship program through public and private nonprofit institutions that provides institution credit to students and grants to employers.

Subd. 3. Program components.  Requires students to be admitted to a major closely related to the intern experience.  Requires institutions to have written agreements with employers for 12-week or more internships, paying at least minimum wage for a minimum of 16 hours per week and to provide academic credit for the internship.  Requires employers to enter into written agreements with the institution agreeing to the terms of the internship and stating that the intern would not have been hired without the grant and does not replace existing employees.  Requires annual reports to OHE from institutions and employers.  Excludes clinical internships from the program.

Subd.  4. Grant allowed; maximum limits.  Authorizes a grant of 40 percent of the intern’s compensation up to $1,250 per intern for a maximum of five interns in a taxable year.  Limits the total grants in a fiscal year to $1.250 million.

Subd. 5.  Allocations to institutions.  Requires OHE to allocate grants and administrative fees to institutions based on relevant criteria, including geographic distribution of work locations.

Subd. 6. Reports to the legislature.  Requires OHE and DOR to submit two reports to the legislature on the program.  The February 1, 2013, report must have cost and participation information.  The February 1, 2014, report must have an effectiveness analysis.

No comparable provision

Section 2. Liquor sellers; annual information reporting.  Prohibits the commissioner of DOR from requiring distributors of alcoholic beverages to include copies of retailers’ sale tax exemption certificates for each of the retailers to which they made sales in the annual information which must be filed with DOR.

Effective date: Reports required to be filed in calendar year 2012.

S.F. 2136 (Policy/technical and nonbudget bill). Same

Section 3. Tax credit; small brewers.  Expands the definition of qualified brewer, increasing the amount of production a qualified brewer may have, from 100,000 barrels per year to 250,000 barrels per year, to determine eligibility for a tax credit.  (The tax credit equals the excise tax on 25,000 barrels of strong beer.)  The increase is effective for calculations based on the 2011 production year (tax credit will be available for excise tax on 2012 production).

Article 1. Section 22. Same

Section 4. Tax may be imposed; Otter Tail County.  Provides that if Otter Tail County does not impose the aggregate materials (gravel) tax, authorized by statute, the city of Vergas may impose the tax in the city instead.  The proceeds of the tax would be retained by the city and used for the same purpose as the county tax. (Same language as used in current law for the St. Louis County townships.) The city tax would be repealed if Otter Tail County started to impose a gravel tax.

SF 2136. Similar.  Senate language specifies that the proceeds must be used for the purposes described in subdivision 7. (Same language as in current law for Scambler township.)

Section 5. Border city allocations.  Allocates $150,000 for border city enterprise zone and border city development zone tax reductions.  This allocation is divided equally between the two programs ($75,000 to each), but the city can reallocate the amounts between the two programs.  The allocation is divided among the qualifying border cities on a per capita basis.  The five cities that qualify are Moorhead, Dilworth, East Grand Forks, Breckenridge, and Ortonville.

No comparable provision

Section 6. St. Paul; capital bonding.  Extends the special law authorizing the city of St. Paul’s capital improvement bonding program from 2013 to 2024.  These bonds are general obligation bonds and may be issued upon a vote of five of the seven members of the city council without voter approval – this is an exception to the city’s home rule charter, which otherwise would require simple majority approval by the council and voter approval at a general or special election.

S.F. No. 2136 (Policy/technical and nonbudget bill)

Similar, except Senate increases maximum principal amount from $20 million to $25 million.

Section 7. Itasca county bonds.  Modifies a 2003 special law that authorized Itasca county to issue revenue bonds to finance a 35-bed nursing home facility to replace an existing facility.  The 2003 bonds were not used to increase the number of beds.

This section allows the county to issue general obligation bonds for the nursing home.  Under Minnesota Statutes, section 376.56, an election on issuing general obligation bonds is not required “for acquiring, improving, remodeling, or replacing an existing nursing home without increasing the total number of accommodations for residents in all nursing homes in the county.”  This will allow the county to issue refunding bonds to obtain a better interest rate.

Issuance of the bonds would be subject to a reverse referendum that follows the rules that apply to county capital improvement program (CIP) bonds.

S.F. No. 2136 (Policy/technical and nonbudget bill) Similar – Senate does not require that issuance of bonds be subject to a reverse referendum.

No comparable provision

Section 1.  General Fund Savings and Budget Reserve Transfer.  Requires the Commissioner of Management and Budget to reduce general fund appropriations to executive agencies by June 30, 2013, by the amount of savings provided through implementation of the data analytics master contract program.  Requires the Commissioner of Management and Budget to cancel the difference between the savings resulting from state government appropriation reductions and $99,900,000 in the budget reserve account to the general fund on November 15, 2012.  Effective the day following final enactment.

Section 8. Special recovery fund.  Makes a one-time transfer to the general fund of $4.3 million from the Revenue Department service and recovery special revenue fund.  This is unencumbered local sales tax revenue retained the Department of Revenue to administer the various local sales taxes that has accumulated over several years.

Section 2. Same, except the Senate language specifies that statutory citation for the special recovery fund. 

Section 9. Liquor reporting; retroactive effective date.  Makes the provisions of section 2 effective retroactively for the reports required to be made in calendar years 2010 and 2011 and eliminates the requirement that taxpayer identification numbers be provided as part of the annual report.  This reporting requirement was enacted by the 2008 Legislature and the first reports were required to be filed in 2009 for calendar year 2008.  Failure to report is subject to $500 penalty for unintentional violations and $1,000 for intentional violations.

S.F. 2136 (Policy/technical and nonbudget bill). Same

Section 10. Purpose statements for tax expenditures.  Provides purpose statements for various tax expenditures added by the bill as follows:

• Employer credit for hiring veterans – to hire returning veterans and to encourage their reintegration into the community.
• Corporate franchise tax certificate transfer program – to create new high paying and high quality jobs in Minnesota
• Foreign operating corporation property tax credit – to create and retain jobs in Minnesota

Background.  Minnesota Statutes, section 3.192, requires bills that create new tax expenditures to provide a purpose for the tax expenditure and a standard or goal for use in measuring its effectiveness.

No comparable provision

Section 11. Tax reform commission.  Establishes a tax reform commission in the legislative branch to study the tax and revenue system and to make recommendations to the legislature.

Findings.  Makes legislative findings that the tax system is not well adapted to the changing economy and needs to be reformed to make it:

• Simple and transparent
• Beneficial for job creation
• Fair and equitable
• Neutral and efficient

Membership.  The commission consists of 15 members, appointed as follows:

• Three gubernatorial appointees: two from the executive branch and one private citizen
• Four appointees by the Senate majority leader: two Senate members and two private citizens
• Two appointees by the Senate minority leader: one Senate member and one private citizen
• Four appointees by the Speaker of the House: two House members and two private citizens
• Two appointees by the House minority leader: one House member and one private citizen

The speaker and majority leader each designates a co-chair of the commission, who is responsible for supervising the staff.  Appointments are to be made within 14 days of enactment.  Members serve for the life of the commission and vacancies are filled in the same manner as the original member.  The commission is to first meet no later than 60 days after enactment.

Duties.  The commission is directed to study and evaluate Minnesota’s state and local tax system with the goal of making long-term improvements.  Specifically directs the commission to examine:

• the mix of state revenue between taxes and fees
• the implications of expected demographic and economic changes on the revenue system
• the extent to which the existing system and the commission’s proposal satisfy the basic tax policy principles of equity, neutrality, revenue adequacy, competitiveness, simplicity, ease of compliance and administration, and visibility or accountability

Report.  The commission is to report to the legislature no later than March 1, 2013, on:

• Results of the commission’s evaluation of the existing tax system and alternatives
• Recommendations for reform and improvement, done on a revenue neutral basis
• A draft bill implementing its recommendations for introduction in the 2014 legislative session.

Per diem.  Commissioner members receive a per diem of $55 when engaged in commission work and to be compensated for expenses.

Appropriation.  The section contains a $25,000 general fund appropriation for fiscal years 2012 and 2013.

Staff.  The commission can hire or use existing legislative and executive branch staff.  Legislative staff and Department of Revenue staff must provide services to the commission on request.

Expiration.  The commission terminates 30 days after submitting its report.

No comparable provision

Section 12. City of Woodbury bonds.  Authorizes Woodbury to issue general obligation bonds to rehabilitate and expand the Bielenberg Sports Center without submitting the issue to the voters.  To qualify for the exemption, the bonds must be secured by revenues from the facility and the city must estimate the bonds can be paid with a property tax levy that is no bigger than the levy used to pay the original bonds used to finance the Center.

Issuance of the bonds, however, would be subject to a reverse referendum that follows the rules that apply to county CIP bonds.

S.F. No. 2136 (Policy/technical and nonbudget bill) Same

Section 13. Appropriation; greater Minnesota internship program.  Appropriates $1.25 million in fiscal year 2013 from the general fund to the commissioner of DEED to make grants under the academic internship program in section 1.  Five percent of the appropriation may be used by the Office of Higher Education for administrative expenses.  Provides for the appropriation to become part of DEED’s base budget.

No comparable provision

Section 14. Steele county; CIP bonding authority.  Authorizes Steele county to issue up to $650,000 of capital improvement program (CIP) bonds for improvements to its county fairgrounds and to construct a highway maintenance and operations complex.

No comparable provision

Section 15. Wadena county; CIP bonding authority.  Authorizes Wadena county to issue up to $1 million of capital improvement program (CIP) bonds for improvements to its county fairgrounds.

No comparable provision

House has similar provisions in H.F. 2072.  In Tax Committee.

Senate Article 5: Homestead Market Value Cleanup

Section 1.  County Fairgrounds; Improvement Aided.  Converts the criteria that allows a city, town, or school district to spend up to a certain amount per year on county fairground improvements from taxable to estimated market value.

Section 2.  Agricultural Land Preservation and Conservation Assistance Program.  Converts minimum levy required for a county to participate in program from 0.01209 percent of taxable market value to estimated market value.

Section 3.  Fire and Police Department Aid.  Modifies definition of "market value" by changing it to "estimated market value."

Section 4.  Fire and Police Department Aid; Apportionment of Fire State Aid.  Modifies apportionment of state fire aid based on estimated market value rather than market value.  

Section 5.  Fire and Police Department Aid; Fire State Aid.  Changes reference from market value to estimated market value.

Section 6.  Auxiliary Forest.  Clarifies that the market value of land in an auxiliary forest for all other purposes other than taxation be based on estimated market value.

Section 7.  Watershed Management Tax District.  Converts the levy limits on watershed management tax district levies in rural towns 0.02418 percent of taxable market value to estimated market value.

Section 8.  Watershed Management Organizations.  Converts the reference of levy limits on bond levies in rural towns 0.02418 percent of taxable market value to estimated market value.

Section 9.  Lake Minnetonka Conservation District.  Converts the total funding limit from .00242 percent of taxable market value to estimated market value.

Section 10.  White Bear Lake Conservation District.  Changes the levy limit for municipalities within the district from 0.02418 percent of taxable market value to estimated market value on taxable property within the district

Section 11. Watershed Districts, Organizational Fund.  Changes the cap on a district’s organizational expense fund from 0.01596 percent of taxable market value to estimated market value.

Section 12.  Watershed District, General Fund.  Modifies the limit on a district’s general levy from 0.048 percent of taxable market value to estimated market value.  This section also modifies the levy for basic water management features from taxable market value to estimated market value.

Section 13.  Watershed District, Survey and Data Acquisition Fund.  Converts the levy limit from .02418 percent of taxable market value to one based on estimated market value.

Section 14.  Eminent Domain, Blight Test.  Modifies the definition of "structurally substandard" in eminent domain law to refer to estimated market value.

Section 15.  State Aid Payment and Adjustment.  Requires Department of Revenue to compute adjusted net tax capacity values for cities and counties and clarifies that the computations use values that reflect fiscal disparities, tax increment financing, and power line credit.

Section 16.  County Historical Society.  Converts city and town levy limits from .02418 percent of taxable market value to estimated market value.

Section 17.  Emergency Medical Service Districts.  Converts district levy limit from 0.048 percent of taxable market value to estimated market value.

Section 18.  County State Aid Highway, Rural Counties.  Converts levy calculation in CSAH formula for rural counties from 0.01596 percent of taxable market value to estimated market value.

Section 19.  County State Aid Highway, Urban Counties.  Converts levy calculation in CSAH formula for urban counties from 0.00967 percent of taxable market value to estimated market value.

Section 20.  County Highways; Bridges Within Certain Cities.  Modifies exemption from requirement that counties spend CSAH money on bridge and dam improvements in cities of the third and fourth class.  Under current law, this requirement does not apply to cities with taxable market value of more than $2,100 per capita and this change converts the amount based on estimated market value.

Section 21.  Taxation in Unorganized Townships.  Modifies qualifying rules related to expenditure of the county road and bridge levy in unorganized towns from valuation based on taxable market value to estimated market value.

Section 22.  County Road and Bridge Bonds.  Converts the limit on county road and bridge bonds from 0.12089 percent of market value to estimated market value.

Section 23.  Definition of Estimated Market Value.  Defines "estimated market value" for property tax statutes as the assessor’s determination of market value.

Section 24.  Definition of Taxable Market Value.  Defines "taxable market value" for property tax statutes as the estimated market value for the parcel as reduced by market value exclusions, deferments of value, or other adjustments.

Section 25.  Definition of Market Value.  Converts taxable market value to estimated market value in statute used in computing tax levy limits, debt limits, and statute aid computations and specifically references statutory exclusions and provides that estimated market value is the value prior to these adjustments.  This section also reverses current law which requires that tax-exempt wind energy property be added to taxable market value.  Also, limits under special law and city charters that are based on market value are changed to estimated market value.  The measure of estimated market value for tax limits is the amount for the previous assessment year while it’s the most recently available amount for debt limits.

Section 26.  Valuation of Property.  Corrects a cross-reference to statute related to value of platted land.

Section 27.  Classification of Property; Tax Capacity.  Eliminates an obsolete definition of "gross tax capacity."

Section 28.  Disparity Reduction Aid.  Requires that taxable market value be used in computing disparity reduction aid.

Section 29.  Disparity Reduction Credit.  Requires that taxable market value be used in computing disparity reduction credit.

Section 30.  Taxes; Determination of Levy Limit.  Provides that the law converting old special law and city charter provisions containing levy or mill rate limits provide increases based on growth in estimated market value rather than taxable market value.

Section 31.  Correction of Levy Amount, Towns.  Modifies threshold used to determine which year levy for a correction of mistakes in town levies will be added to from a percentage or taxable market value to estimated market value.

Section 32. Levy Limits, Adjusted Levy Limit Base.  Changes reference from taxable market value to estimated market value under levy limit.  This law is now obsolete.

Section 33.  Contents of Tax Statement.  Eliminates obsolete reference to limited market value and updates a cross- reference to new definition of "taxable market value."

Section 34.  Iron Range Fiscal Disparities Program, Adjusted Market Value.  Defines "adjusted market value" under the Iron Range Fiscal Disparities Program statute.

Section 35.  Iron Range Fiscal Disparities Program, Fiscal Capacity.  Modifies definition of "fiscal capacity" for municipalities.

Section 36.  Iron Range Fiscal Disparities Program, Average Fiscal Capacity.  Modifies definition of "average fiscal capacity" for municipalities.

Section 37.  Iron Range Fiscal Disparities Program, Net Tax Capacity.  Modifies definition of net tax capacity by changing market value to taxable market value.

Section 38.  Mortgage Registry Tax.  Clarifies that the county portion of collections of mortgage registry tax paid for mortgages on properties in more than one county is allocated to the counties based on estimated market value.

Section 39.  Real Property Outside County, Deed Tax.  Clarifies that the county portion of collections of the deed tax for properties in more than one county is allocated to the counties based on estimated market value.

Section 40.  Volunteer Firefighters Retirement Plan.  Provides that one-half of additional contributions to a volunteer firefighter’s pension fund, required due to insufficient funds, be allocated to employer-municipalities in proportion to their estimated market values.

Section 41.  Town General Law; Major Purchases.  Converts threshold that subjects large contracts for town purchases to reverse referendum authority from 0.24177 of the taxable market value to estimated market value.

Section 42.  Towns; Authority to Issue Certificates of Indebtedness.  Converts reference from market value to estimated market value under threshold that subjects town’s issuance of certificates of indebtedness to reverse referendum authority.

Section 43.  Towns; Firefighters’ Relief Tax Levy.  Converts levy limit for firefighter pension benefits from 0.00806 percent of taxable market value to estimated market value.

Section 44.  Metropolitan Area Towns; Certificate of Indebtedness.  Converts reference from market value of the town to estimated market value of the town concerning threshold for certificates of indebtedness.

Section 45.  Towns May Be Dissolved.  Converts criteria for dissolution of town from amount of taxable market value to estimated market value.

Section 46.  Counties; Change of Boundaries.  Changes reference from market value of a county to estimated market value for purposes of the criteria for creating new counties.

Section 47.  Counties; Capital Improvement Bonds.  Removes definition of "tax capacity."

Section 48.  Counties; Capital Improvement Bond Debt Limit.  Converts limit on capital improvement bonds from .012 percent of taxable market value of property in county to estimated market value.

Section 49.  Counties; Nonprofit Legal Assistance.  Converts limit on county’s appropriation to nonprofit corporation providing legal assistance from 0.00604 percent of taxable market value to estimated market value.

Section 50.  Counties; Courthouse.  Converts debt limit from 0.04030 percent of taxable market value to estimated market value.  Any amount in excess requires approval of majority of county voters.

Section 51.  Counties; County Emergency Jobs Program.  Modifies the limit that a county may levy for emergency jobs program from 0.01209 percent of taxable market value to estimated market value.

Section 52.  Hennepin County; Building, and Maintenance Fund.  Converts levy limit from 0.02215 percent of taxable market value to estimated market value.

Section 53.  Hennepin County Library Levy.  Converts levy limit from 0.01612 percent of taxable market value to estimated market value.

Section 54.  Three Rivers Park District Levy.  Converts levy limit from 0.03224 percent of taxable market value to estimated market value.

Section 55.  Anoka County; Library Debt Limit.  Converts debt limit on library bonds from 0.01 percent of taxable market value to estimated market value.

Section 56.  Anoka County; Library Levy Limit.  Converts levy limit from .01 percent of taxable market value of taxable property in the county to estimated market value.

Section 57.  Payment of County Orders or Warrants.  Converts minimum amount required for county to qualify to borrow from another county from $1.033 billion of taxable market value to estimated market value.

Section 58.  Nonconformities; Continuation of Nonconformity.  Changes from market value to estimated market value concerning an exception to continue nonconforming land uses if more than 50 percent of the market value of the building or structure is destroyed by fire or natural disaster. 

Section 59.  Regional Railroad Authority; Levy Limit.  Converts levy limit from 0.04835 percent of taxable market value to estimated market value.

Section 60.  Community Corrections; Leasing.  Converts rent limit from 0.1 percent of taxable market value to estimated market concerning issuance of revenue bonds financing community correction facilities.

Section 61.  Home Rule Charter City; Issuance of Capital Notes.  Converts debt limit on capital notes issued by home rule charter city without election from 0.03 percent of taxable market value to estimated market value.

Section 62.  Statutory Cities; Contracts.  Converts threshold that subjects conditional sale contracts and contracts for deed purchases to reverse referendum authority from 0.24177 percent of market value to estimated market value.

Section 63.  Statutory Cities; Certificates of Indebtedness.  Converts threshold that subjects issuance of certificates of indebtedness to reverse referendum authority from 0.25 percent of market value to estimated market value.

Section 64.  Special Service Districts.  Modifies test used to determine whether a split use property in a special service district is subject to full or proportionately to the chargers or levies from 50 percent of taxable market value to estimated market value.

Section 65.  Pedestrian Mall; Improvement Assessments.  Converts levy limits for pedestrian mall improvements from 0.12089 percent of market value to estimated market value.

Section 66.  Hospital; City of the First Class.  Converts levy limit for cities of the first class owning hospitals from 0.00806 percent of market value to taxable market value.

Section 67.  Tourist Camping Grounds.  Converts levy for camping ground established by home rule charter or statutory city from 0.00806 percent of taxable market value to estimated market value.

Section 68.  Museum, Gallery, or School of Arts.  Converts levy from 0.00846 percent of taxable market value to estimated market value.

Section 69.  St. Cloud Transit Commission Levy.  Converts levy limit from 0.12089 percent of market value to estimated market value.

Section 70.  Duluth Transit Commission Levy.  Converts levy limit from 0.07253 percent of taxable market value to estimated market value.

Section 71.  Municipalities; Acceptance of Gifts.  Converts qualifying rule for cities of the second, third, and fourth class to accept gifts with conditions from $41 million of taxable market value to estimated market value.

Section 72.  Housing and Redevelopment Authorities Levy Limit.  Converts levy limit for housing and redevelopment authorities from 0.0185 percent of market value to estimated market value.

Section 73.  Housing and Redevelopment Authorities Debt Limit.  Converts debt limit on issuance of general obligation bonds from one-half percent of taxable market value to estimated market value.

Section 74.  Port Authorities; Mandatory City Levy.  Converts levy limit from 0.01813 percent of taxable market value to estimated market value.

Section 75.  Seaway Port Authority Levy.  Converts levy limit from 0.01813 percent of taxable market value to estimated market value.

Section 76.  Port Authorities’ Discretionary City Levy.  Converts levy limit from 0.00282 percent of taxable market value to estimated market value.

Section 77.  Economic Development Authorities; City Tax Levy Limit.  Converts levy limit from 0.01813 percent of taxable market value to estimated market value.

Section 78. Tax Increment Financing; Original Net Tax Capacity.  Provides for adjustments to the original tax capacity of TIF districts for market value exclusions.

Section 79.  Development Pacts with Entities of Other States.  Converts levy limit from 0.00080 percent of taxable market value to estimated market value.

Section 80.  First Class City; Publicity Levy.  Converts levy limit from 0.00080 percent of taxable market value to estimated market value.

Section 81.  Hazardous Property Penalty.  Converts penalty city may assess on property determined to be hazardous from one percent of taxable market value to estimated market value.

Section 82.  Towns/Cities; Joint Maintenance of Cemetery.  Modifies law allowing contiguous towns and statutory cities to jointly maintain public cemeteries if each have a minimum market value of $2 million.  The minimum market value would be based on estimated market value.

Section 83.  City Improvement Fund.  Modifies minimum requirement of taconite and iron ore values that permits cities to establish a permanent improvement fund based on estimated rather than taxable market value.

Section 84.  City Improvement Fund; Levy Limit.  Converts levy limit from 0.08059 percent of taxable market value to estimated market value.

 Section 85.  Acceptance of Provisions.  Modifies reference in acceptance of 1943 law regulating financial practices which applied to cities with more than 50 percent of their value in unmined iron ore value to refer to estimated market value.

Section 86.  Metropolitan County; Debt Limit.  Converts debt limit from 0.01209 percent of taxable market value to estimated market value.

Section 87.  Value of Property for Bond Issues by School Districts.  Converts statute that adjusts school district debt limit for districts affected by airport detachments from taxable market value to estimated market value.

Section 88.  Metropolitan Airport Commission; General Budget.  Converts commission’s levy limit for operation and maintenance from 0.00806 percent of market value to estimated market value.

Section 89.  Metropolitan Airport Commission; Additional Taxes.  Converts commission’s additional levy limit from 0.00121 percent of market value to estimated market value.

Section 90.  Metropolitan Airport Commission; Levy Limit.  Converts commission’s levy limit from 0.00806 percent of taxable market value to estimated market value.

Section 91.  Metropolitan Mosquito Control Commission; Levy Limit.  Converts rate of growth in commission’s levy from the growth in its taxable market value to estimated market value.

Section 92.  Metropolitan Area Fiscal Disparities Program; Adjusted Market Value.  Defines "adjusted market value" as taxable market value adjusted by the assessment sales ratio.

Section 93.  Metropolitan Area Fiscal Disparities Program; Fiscal Capacity.  Defines "fiscal capacity" as being based on adjusted market value.

Section 94.  Metropolitan Area Fiscal Disparities Program; Average Fiscal Capacity.  Defines "average fiscal capacity" as being based on adjusted market value.

Section 95.  Metropolitan Area Fiscal Disparities Program; Net Tax Capacity.  Defines "net tax capacity" as being based on taxable market value.

Section 96.  Debt of Defines Municipalities; Capitol Improvement Bonds.  Converts limit that applies under city capital improvement bond law from .16 percent of taxable market value to estimated market value.

Section 97.  Debt of Defined Municipalities; General Net Debt Limit.  Converts general net debt limit for municipalities other than school districts and cities of the first class from three percent of market value to estimated market value.

Section 98.  Debt of Defined Municipalities; First Class Cities Net Debt Limit.  Converts net debt limit from two percent of market value to estimated market value.

Section 99.  Debt of Defined Municipalities; School Districts Net Debt Limit.  Converts net debt limit from 15 percent of taxable market value to estimated market value and clarifies that values may be adjusted by assessor’s sales ratio if it results in a higher limit.

Section 100.  Certain Independent School Districts; City of the First Class.  Converts net debt limit for bonds with a maturity of more than two years from 0.7 percent of taxable market value to estimated market value.

Section 101.  Refunding Bonds.  Converts debt threshold that allows a city, county, town, or school to issue refunding bonds without an election from 1.62 percent of taxable market value to estimated market value.

Section 102.  State Board of Investment; Bond Purchase.  Converts maximum limit on Minnesota municipal bond purchases by State Board of Investment from 3.63 percent of taxable market value to estimated market value.

Section 103.  Local Government Aid; City Net Tax Capacity.  Updates reference to city net tax capacity in LGA statute to recodified section.  This section is effective the day following final enactment.

Section 104.  Local Government Aid; County Program Aid.  Updates reference to county net tax capacity in county program aid statute to recodified section.  This section is effective the day following final enactment.

Section 105.  County and Regional Jails; Levy Limit.  Converts levy to pay county jail bonds issued without election from 0.09671 percent of market value to estimated market value.

Section 106.  County and Regional Jails; Leases.  Converts rent limit permitting lease revenue bond financing of county jails from 0.1 percent of taxable market value to estimated market value.

Section 107.  Definition of Estimated Market Value.  Adds definition of "estimated market value" to general definition section of statutes.  This definition applies for purposes of levy, tax, spending, debt limit and calculation of aid payments.

Section 108.  Revisor’s Instruction.   Directs the Revisor of Statutes to recodify the statute governing calculation of adjusted net tax capacity in property tax statutes (Chapter 273).   This section is effective the day following final enactment.

Section 109.  Repealer.  Repeals the following statutes: 

• M.S. 273.11, subd. 1a – Limited Market Value
• M.S. 276A.01, subd. 11 – Definition of ‘valuation’ under Iron Range Fiscal Disparities Law.
• M.S. 276A.06, subd. 10 – Adjustment of value under Iron Range Fiscal Disparities Law.
• M.S. 473F.02, subd. 13 – Definition of ‘valuation’ under Metropolitan Area Fiscal Disparities Law.
• M.S. 473F.08, subd. 10 – Adjustment of value under Metropolitan Area Fiscal Disparities Law.
• 477A.01, subd 11 – Definition of ‘equalized market value’ in local government aid statute.

Section 110.  Effective Date.  Provides the changes affecting computation of debt limits are effective the day following final enactment while changes affecting levy and tax limitations or aid computations are effective for taxes payable in 2013.