Senate Counsel, Research
and Fiscal Analysis
G-17 State Capitol
75 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155-1606
(651) 296-4791
Fax: (651) 296-7747
Tom Bottern
Director
   Senate   
State of Minnesota
 
 
 
 
 
H.F. No. 2337 - Omnibus Jobs and Tax Reform Bill (Conference Committee Report)
 
Author: Senator Julianne E. Ortman
 
Prepared By: Nora B. Pollock, Senate Counsel (651/297-8066)
Eric S. Silvia, Senate Counsel (651/296-1771)
Shelby McQuay, Senate Fiscal Analyst (651/296-5259)
Jack Paulson, Senate Analyst (651/296-4954)
 
Date: April 30, 2012



 

 ARTICLE 1

PROPERTY TAX

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 5,000 must also participate in the expenditure type reporting under section 471.703 in order to be eligible.

Section 2. 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.

Section 3.  State general tax.  Removes the inflation index and sets the state general levy amount at $817,423,000 (payable 2012 level) for taxes payable in 2013 and thereafter.

Section 4.  Notice of levy budget hearing; expenditure type reporting.  Requires all counties and cities with a population of more than 5,000 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 Web site.  Effective July 1, 2012.

Section 5.  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 5,000, budgetary information is available on the municipal Web site.  Effective July 1, 2012.

Section 6.  Truth in Taxation Notice; special taxing district.  Requires that the Truth in Taxation notice list separately any levy by a special taxing district that exceeds 25 percent of the total of all special taxing district levies and provide county government contact information where additional information may be obtained for each special taxing district.

Section 7.  Property tax statements; special taxing districts. Requires that any levy by a special taxing district that exceeds 25 percent of the total of all special taxing district levies be separately stated on property tax statement.

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 2013. 

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.

          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 10.  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.

Section 11.  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 12.  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 10.

Section 13.  Local government aid; penalties.  Authorizes a graduated forfeiture of local government aid for cities that do not submit the required financial documents to the State Auditor by the required deadline.  

Section 14.  Local government aid; 2011 payments.  Authorizes payment of 2011 local government aid to cities that did not meet the reporting requirement deadline provided that all necessary information is submitted to the State Auditor by May 31, 2012.

Section 15.  Cook/Orr ambulance services; levy authority.  Expands the authorized uses of the levy proceeds to include attached and portable equipment for use in and for the ambulances and parts and replacement parts for maintenance and repair of ambulances, and specifically excludes "operation expenses."

Section 16.  Carlton County cemetery levy.  Permits Carlton County to levy annually in and for the unorganized township of Sawyer for cemetery purposes.  In 1999, the legislature authorized the county to levy up to $1000 per year for the same purpose.  This section removes the cap.  Effective upon local approval by Carlton County.

Section 17.  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.

Section 18.  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 nine years to ten 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.  The temporary increase in the allowable holding period expires December 31, 2015.

Section 19.  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.

Section 20.  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.

ARTICLE 2

 INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

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.  Effective for qualified small businesses certified after June 30, 2012.

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 10 to 20 in the case of businesses engaged in researching, developing, or producing drugs that require U.S. Food and Drug Administration approval (effective the day following final enactment);
  • prohibits the business from having its securities traded on a public stock exchange prior to the investment being made and within 180 days of the date of the investment (effective for qualified small businesses certified after June 30, 2012); 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 (effective for qualified small businesses certified after June 30, 2012).

Section 3.  Credit allowed.   Increases the annual cap on angel credit allocations from $12 million to $16.5 million, effective for tax year 2012.  The annual cap on allocations is increased to $17 million for tax years 2013 and 2014.  Retains the present law sunset of the credit after 2014.  Effective for taxable years beginning after December 31, 2011. 

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).  Effective the day following final enactment.

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.  Effective for businesses requesting certification starting on the day following final enactment.

Section 6.  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.  Effective the day following final enactment.

Section 7. Withholding Tax. Strikes language referencing the contractor withholding requirement repealed in a later section.  Effective for payments made after June 30, 2012.

Section 8.  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 6.  Effective the day following final enactment.

Section 9.  Internal Revenue Code.  Updates the reference in Minnesota Statutes to the most recent version of the Internal Revenue Code.  Effective the day following final enactment.

Section 10.  Research and development credit.  Increases the second tier rate of the research and development credit from 2.5 percent to 3.1 percent beginning in taxable year 2012.  The second tier rate applies to qualifying expenditures in excess of $2 million.  

Section 11.  Definitions.  References the definitions of “federal credit, placed in service,” and “qualified rehabilitation expenditures” to their meaning given in section 47 of the Internal Revenue Code, for purposes of the Minnesota historic structure rehabilitation credit.  Effective the day following final enactment.

Section 12.  Applications; Allocations.  Replaces the term “expenses” with “expenditures” for purposes of the historic structure credit.  Requires the State Historic Preservation Office of the Minnesota Historical Society to notify the developer of a project of its eligibility determination in writing.  Provides for a decision of the office regarding eligibility for a state credit or grant 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.  Effective the day following final enactment.

Section 13.  Credit certificates; grants.  Provides that assignment of credit allocation certificates issued by the State Historic Preservation Office is not valid unless the assignee notifies the Commissioner of Revenue within 30 days that the assignment is made, and requires the commissioner to prescribe the forms necessary for such notification.  Provides that a credit issued to a partnership, LLC taxed as a partnership, S corporation, or multiple owners of property passed through pro rata to partners, members, shareholders, or owners respectively, is not an assignment of a credit.  Allows a grant agreement between the office and a grant recipient to be issued to another individual or entity.  Effective the day following final enactment. 

Section 14.  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.  Effective the day following final enactment.

Section 15.  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 canceled or resulted in credit certificates, whichever is earlier.

Section 16.  Income tax credit for employment of veterans.  Allows a state income tax credit for taxpayers who employ qualified full-time employees who are qualified veterans for full-time positions after March 31, 2012.  

  • A "qualified full-time employee" is a full-time employee who has completed 12 consecutive months of service as a full-time employee for a qualified employer; is a Minnesota resident on the date of hire; and is a "qualified unemployed veteran." 
  • A "qualified unemployed veteran" is a person who was in active military service in a designated area after September 11, 2001; was separated from active military service at any time during the five-year period prior to the date of hire; received unemployment compensation under state or federal law for at least four weeks during the one-year period prior to the date of hire; and was unemployed on the date of hire.  

Qualified employers who hire qualified full-time employees after March 30, 2012, and before January 1, 2013, are eligible for a credit equal to $3,000 times the net increase in full-time qualified full-time employees hired.  Qualified employers who hire qualified full-time employees after December 31, 2012, and before July 1, 2013, are eligible for a credit equal to $1,500 times the net increase in qualified full-time employees hired.  The credit may be claimed in the taxable year in which the qualified full-time employee completes 12 consecutive months of continuous service as a full-time employee.  The lifetime cap on the credit for each employer is $50,000.

The Commissioner of Revenue is directed to develop an Internet application process by July 1, 2012, that allows employers to apply for tentative credits.  An employer may apply for tentative credits for not more than 16 qualified full-time employees hired in 2012, or 33 qualified full-time employees in 2013.  The application must include employer identification information and the name and date of hire of the employee.  The commissioner shall approve the applications received for the first 2,500 full-time employees hired based on the date of application receipt.

Construction trades employers are eligible to apply for tentative credits.  The employer must file a renewal application no earlier than six months after the date of hire, confirming that the employee for whom the tentative credit was granted is still employed and that the employer reasonably believes all conditions of eligibility for the credit will be met.  If the employer does not file the renewal application within seven months of date of hire, the employer is no longer eligible to receive the credit, and any tentative credits are canceled and may be reissued to other eligible employers.

Credits granted to a partnership, LLC taxed as a partnership, S corporation, or multiple owners of a business are passed through to the partners, members, shareholders, or owners pro rata based on their share of the entity's assets or as specially allocated in their organizational documents.  If the amount of the credit exceeds the employer’s tax liability, the commissioner refunds the excess to the employer, and an appropriation from the general fund is created to pay the refunds.

This section is effective the day following final enactment.

Sections 17-18.  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 19.  Effective date for qualified historic structure rehabilitation credit.  Clarifies the effective date of the historic structure rehabilitation credit, originally enacted in 2010, to make the credit effective for rehabilitation expenditures first paid by the developer or taxpayer after May 1, 2010, and for rehabilitation that occurs after May 1, 2010, provided that the application submitted for credit eligibility is submitted before the project is placed in service.  Effective the day following final enactment and applies retroactively for tax year 2010 for certified historic structures placed in service after May 1, 2010, but no credit certificates allowed under the change to the effective date clarification described above may be issued until July 1, 2013. 

Section 20.  IRA rollover amended returns.  Allows individuals who exclude an amount from taxable income in a prior taxable year due to the rollover of an airline payment to a traditional IRA to file an amended Minnesota income tax return through April 15, 2013. 

Section 21.  Repealer.  Repeals the contractor withholding requirement.

ARTICLE 3

SALES AND USE TAXES

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.  These early remittance requirements are currently scheduled to blink off at that time due to the budget surplus in the February 2012 forecast.  Effective for all payments due after June 30, 2012.

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.  Effective for gross revenues received from laboratory service provided on or after July 1, 2013.

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.  Effective for leases entered into after June 30, 2012.

Section 4. Capital equipment; sales tax.  Allows the existing refund of sales taxes paid on capital equipment as an upfront exemption for small businesses.  A small business qualifies for the upfront exemption for calendar years 2013 to 2015 if, in 2010, it:

(1)  had 80 or fewer full-time employees;

(2)  did not have more than the equivalent of $1,000,000 in annual gross revenues or $2,500,000 in annual gross revenues if the business is a technical or professional service; and

(3)  was not more than 20 percent owned by a business that had more than $1,000,000 in annual gross revenues or $2,500,000 in annual gross revenues if the business is a technical or professional service.

All other businesses must still pay the sales tax on capital equipment and apply for a refund as specified in current law for calendar years 2013 to 2015.  Beginning with calendar year 2016, all capital equipment purchases will be exempt upfront.  Effective for sales and purchases made after June 30, 2012.

Section 5.  Qualified data centers.    

Changes the eligibility requirements for the qualified data center sales tax exemption by:

  • Reducing the requisite cost of construction and investment in enterprise information technology equipment from $50 million within a two-year period to $30 million in a three-year period;
  • Reducing the requirement for the amount of space that must be "substantially refurbished" in a data center from 30,000 square feet to 25,000 square feet, to include installation of enterprise information technology equipment, computer software, environmental control and efficiency improvements, and building improvements;
  • Adding language defining "computer software" to include, but not limit to, software utilized or loaded at the qualified data center, including maintenance, licensing, and software customization and/or configuration.

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

Section 6.  Sales to nonprofits.  Narrows the list of purchases of nonprofits not eligible for a sales tax exemption to allow for the exemption in section 7.  Effective for sales and purchases made after June 30, 2012.

Section 7.  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 "established religious order" and “affiliated” for purposes of this subdivision.  Effective for sales and purchases made after June 30, 2012.

Section 8.  Nursing home sales tax exemption.  Exempts a certified nursing facility or boarding care home certified as a nursing facility from sales tax purchases.  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.     

Section 9.  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.  Effective for leases entered into after June 30, 2012.

Section 10.  Use of revenues (Rochester).  Expands the requirements for cities 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.  Effective the day following final enactment.

Section 11.  Rochester lodging tax.  Increases the Rochester lodging tax from one to three percent.  Extends, from December 31, 2014, to December 31, 2016, the date by which bonds and obligations for costs associated with the construction, expansion, improvement, and renovation of the Mayo Civic Center Complex must be issued in order to be funded from the lodging tax revenue.  Repeals the authority for the Rochester food and beverage taxes to be used to fund the Mayo Civic Center Complex bond payments.  Effective the day after the Rochester city council and Rochester's chief clerical officer comply with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Sections 12 and 13.  St. Cloud and area cities local option sales tax.  Allows St. Cloud to use its local sales tax for regional community and aquatics facilities projects.  Allows St. Cloud area cities (St. Joseph, Waite Park, Sartell, Sauk Rapids, and Augusta) to extend their tax from 2018 to 2038, provided the extension is approved by the voters at a general election held by November 2017.  The ballot 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.  Effective the day after the governing body of each city complies with Minnesota Statutes, section 645.021, subdivision 3.

Section 14.  Clearwater local option sales tax.  Provides that proceeds of the Clearwater local sales tax may be used for specified park, trail, walkway, and recreation center improvements, acquisition, and construction.  Effective the day after the Clearwater city council and Clearwater's chief clerical officer comply with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Section 15.  Repealer.  Repeals the Rochester food and beverage tax.  Effective the day after the Rochester city council and Rochester's chief clerical office comply with Minnesota Statutes, section 645.021, subdivisions 2 and 3.  Repeals the remittance requirement, effective for payments due after June 30, 2012.

ARTICLE 4

LOCAL DEVELOPMENT

Section 1.  Authority; tax increment financing.  Modifies the definition of "authority" by adding a municipality that undertakes a project pursuant to the newly created mining reclamation project area.

Section 2.  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 3.  Soil deficiency district definition.  Defines a soil condition district as a district consisting of a project or portions of a project within which the authority finds by resolution that the following exist:

  1. 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
  2. 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 4.  Mining reclamation project area.  Creates a mining reclamation project area.

      Paragraph (a) authorizes an authority to designate a mining reclamation project area where parcels consisting of at least 70 percent of the acreage, excluding street and railroad right of ways, are characterized with one or more of the following:

  1. peat or other soils with geotechnical deficiencies that impair development of buildings or infrastructure;
  2. soils or terrain that requires substantial filling in order to permit the development of buildings or infrastructure;
  3. landfills; dumps, or similar deposits of municipal or private waste;
  4. quarries or similar resource extraction sites;
  5. floodway; or
  6. substandard buildings.

       Paragraph (b) clarifies that a parcel is deemed to meet the requirements above if 50 percent of the area meets the requirement, but for substandard buildings, the requirement is 30 percent. 

Section 5.  Municipality approval.  Requires an authority that establishes a mining reclamation project area to document the reasons and supporting facts for districts established in the area and retain the documentation until two years after a district is decertified.  The findings must have been made and documented no more than ten years before the approval of the tax increment financing plan for the district. 

Section 6.  Duration limits.  Sets the duration limit for a soil deficiency district at 20 years.

Section 7.  Soils condition districts.  Provides that increments from a soils condition district in a mining reclamation project area can be used for public improvements in the area that are directly caused by the removal or remedial action. 

Section 8.  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.

Section 9. Use of Surplus Increments. Extends by 18 months, to January 1, 2014, the 2010 job bill’s expanded authority, as extended by Laws 2011, chapter 112, to spend excess and surplus tax increment. Under present law, this authority applies to construction of new or substantial rehabilitation of existing buildings if:

  1. Construction begins before July 1, 2011;
  2. The development will create new jobs, including construction jobs; and
  3. The development would not have occurred without assistance.

Section 10.  Soil deficiency district increments.  Restricts the use of increments from a soil deficiency district in a mining reclamation project area to the acquisition of parcels, paying the cost of correcting soil deficiencies, administrative expenses and redevelopment costs provided that the redevelopment costs do not exceed 25 percent of the tax increment.

Section 11.  Pooling; expenditures outside district.  Modifies law that allows districts to increase by up to ten percent their expenditures outside the district to develop housing.  This section makes the following changes:

  1. adds rehabilitation to the list of authorized use of expenditures;
  2. requires that the parcel be occupied by one to four family dwelling units with respect to which a mortgage was foreclosed;
  3. requires that any applicable redemption has expired without redemption;
  4. requires that the authority or developer enters into a purchase agreement to acquire the parcel no earlier than 30 days after the expiration of the redemption period; and
  5. removes the requirement that the parcel be vacant for six or more months.

Section 12.  Five-year rule.  Provides that in the tax increment financing plan for a district in a mining reclamation project area, an authority may elect that the five-year rule does not apply. 

Section 13.  Use of revenues for decertification.  Provides that in the tax increment financing plan for a district in a mining reclamation project area, an authority may elect that the provisions governing use of revenues for decertification do not apply. 

Section 14.  Oakdale, TIF.

          Subdivision 1 extends the deadline for the city of Oakdale to establish a tax increment financing district by six years.

          Subdivision 2 exempts the district from the "blight test" rules which requires that 70 percent of the parcels in an area be occupied by buildings and that more than 50 percent of the buildings be substandard.  Special rules are provided for qualification of parcels as being occupied by substandard buildings by exempting the following:

       1.  the three-year limit between demolition of the building and certification of the district;

       2.  the requirement that private demolition be done under a development agreement; and

       3.  the adjustment to original net tax capacity.

Section 15.  Bloomington TIF.  Authorizes the City of Bloomington and the Bloomington Port Authority to extend the duration of TIF District 1-G (containing the former Met Center property) and a portion of 1-C, through December 31, 2038. Absent an extension, the district must decertify in 2018.  Approval of the special law is required to be made by the city, county, and school district.

Section 16.  Bloomington TIF.  Authorizes the City of Bloomington and the Bloomington Port Authority to extend the duration of TIF District No. 1-I (containing the Bloomington Central Station property) through December 31, 2038.  Absent an extension, the district must decertify in 2031.

Section 17. Dakota County, redevelopment TIF.

          Subdivision 1 authorizes the Dakota County Community Development Agency to create a redevelopment district consisting of parcels from an existing redevelopment district that is required to decertify in 2012.  This could be interpreted as an extension of the existing district.

          Subdivision 2 exempts the district from the "blight test" and from the following limits on spending increment:  (1) the prohibition that tax increment not be used to pay for the cost of public improvements, equipment or decorative purpose; (2) the requirement that increment be used to finance the cost of corrections conditions; and (3) the prohibition that tax increment not be used for a commons area used as a public park or a facility used for social or recreational purposes.

          Subdivision 3 authorizes expenditure of increment and clarifies that expenditures are deemed to meet the pooling requirements, the five-year rule and decertification requirements.

          Subdivision 4 requires that the captured tax capacity be included for computing state aid formulas.

Section 18.  Brooklyn Park; TIF.  Grants an extension of the five-year rule for TIF District No. 23 in the city of Brooklyn Park.

ARTICLE 5

ESTATE TAXES

Section 1.  Recapture tax – return required.  Adds a subdivision to require the qualified heir or decedent's representative to file a return if there is a disqualifying cessation of the trade or business or disqualification of the property that was excluded from the taxable estate.  Effective retroactively for estates of decedents dying after June 30, 2011.

Section 2.  Recapture tax – informational return required.  Requires a qualified heir to file two informational returns relating to the qualified property received from the decedent within 24 months and 36 months, respectively, after the decedent's death.  Effective retroactively for estates of decedents dying after June 30, 2011.

Section 3.  Recapture tax – return due date.  Adds a subdivision to clarify the due date of the recapture tax return: 6 months after a disqualifying cessation of the trade or business or a disqualifying disposition of the property that was excluded from the taxable estate.  Effective retroactively for estates of decedents dying after June 30, 2011.

Section 4.  Standard estate tax – payment due date.  Changes a cross-reference for the due date of estate tax payment, which is different than the recapture tax payment. 

Section 5.  Recapture tax -- payment due date.  Clarifies that the recapture tax payment due date is on or before six months after a disqualifying cessation of the trade or business or a disqualifying disposition of the property that was excluded from the taxable estate.  Effective retroactively for estates of decedents dying after June 30, 2011.

Section 6.  Definitions.  Provides that a “family member” includes a trust whose present beneficiaries are all family members qualifies as a family member for purposes of the qualified small business property and qualified farm property exclusion.  Clarifies the definition of “qualified heir” to mean a family member who acquired qualified property upon the death of the decedent.  Effective retroactively for estates of decedents dying after June 30, 2011.

Section 7.  Qualified small business property.  Makes the following clarifying changes to the qualified small business property estate tax exclusion:

  • clarifies the decedent’s ownership interest requirement for qualified small business property;
  • clarifies that during the taxable year that ended before decedent’s death, the trade or business must not have been a passive activity and the decedent or the decedent’s spouse must have materially participated in the trade or business; 
  • excludes publicly traded securities and assets not used in the operation of the trade or business from the value of property subject to exclusion;
  • allows, in the case of a sole proprietor, that if property is replaced by similar property within the three-year period prior to decedent’s death, the replacement property will be treated as having met the three-year ownership test prior to decedent’s death; and
  • provides that for three years following the decedent’s death the trade or business must not be a passive activity and a family member must materially participate in the trade or business.

Effective retroactively for estates of decedents dying after June 30, 2011.

Section 8.  Qualified farm property.  Makes the following clarifying changes to the qualified farm property exclusion:

  • clarifies that the property must be agricultural land and owned by a person or entity that is not excluded from owning agricultural land by section 500.24;
  • provides that for property taxes payable in the year of the decedent’s death, the property was classified as the homestead of the decedent or decedent’s spouse (or both) and as class 2a property under section 273.13, subdivision 23;
  • requires that the decedent continuously owned the property for the three years preceding the decedent’s date of death, either by owning the land or holding an interest in an entity that is not excluded from owning the land under section 500.24; and
  • requires that the property is classified as class 2a property under section 273.13, subdivision 23, for three years following the decedent’s date of death.

Effective retroactively for estates of decedents dying after June 30, 2011.

Section 9.  Recapture tax.  Provides that if the requirements for qualified small business and qualified small farm property are not met in the three years following the decedent’s death, the property will be subject to the estate tax.  Adds an exception for to allow, in the case of a sole proprietor, that the qualified heir will not be treated as having disposed of an interest in the qualified property if the qualified heir replaces qualified small business property with similar property.  Provides that the partial dispositions of qualified property are taxed on the value of the qualified interest disposed of.  Allows a qualifying entity to include a corporation or other entity owned by a decedent' family or family member.  Effective retroactively for estates of decedents dying after June 30, 2011.

 ARTICLE 6

PUBLIC FINANCE

Section 1.  Counties; capital improvement bonds.  Expands the definition of "capital improvement" to include the following:  public works facilities, fairground buildings, and records and data storage facilities.

Section 2.  Counties; capital improvement bonds election requirement.  Makes the following changes to the reverse referendum authority for CIP bonds: 

  1. ties the 5-percent petition requirement to the number of voters in the last county general election;
  2. eliminates the requirement that the Commissioner of Revenue prepare the ballot question; and
  3. prohibits the county from proposing to issue CIP bonds for a one-year period if a reverse referendum petition is filed and the county chooses not to issue the bonds rather than holding an election to approve them.  If the issue is submitted and the voters do not approve, the issue can be resubmitted to the voters after 180 days.

Section 3.  Counties; capital improvement bonds, limitations on amount.  Excludes from the statutory dollar limit on CIP bonds the interest paid by the federal government so that the limit applies only to the portion of the interest paid by the county.  

Section 4.  Bond allocation; qualified bonds.  Eliminates references to specific types of projects that qualify for bond allocations as "public facility bond projects" and updates a reference to the Internal Revenue Code – now, any project that qualifies under federal law could qualify for an allocation of this type of tax-exempt bonding.

Section 5.  Cities; capital improvement bonds election requirement.  Makes the following changes relating to reverse referendum authority for city CIP bonds:  

  1. ties the 5 percent petition requirement to number of voters in last municipal general election;
  2. eliminates the requirement that the Commissioner of Revenue prepare the ballot question; and
  3. prohibits the city from proposing CIP bonds for a one-year period if a petition is filed and the city does not submit the question to voters; if the question is submitted and voters do not approve, it can be resubmitted after 180 days.

Section 6.  Cities; capital improvement bond, limitations on amount.  Excludes from statutory dollar limit interest paid by the federal government so that the limit only applies to the portion of the interest paid by the city. 

Section 7.  Cities; street construction bonds.  Modifies the street construction bond reverse referendum provisions by prohibiting a city from proposing street construction bonds for one year if a petition is filed and an election is not held, but if an election is held and voters do not approve the question, the same can be resubmitted after 180 days.

Section 8.  City of St Paul, capital improvement bonds.  Extends to 2024 the special law authorizing the city of St Paul’s capital improvement bonding program and increases the maximum principal amount from $20,000,000 to $25,000,000.  Absent the extension, the authority expires in 2013.

Section 9.  Itasca County; nursing home bonds.  Authorizes the county to issue general obligation bonds in addition to revenue bonds to finance nursing home improvements.

Section 10.  City of Woodbury; issuance of bonds.  Authorizes the city of Woodbury to issue and sell bonds to pay for costs associated with the Bielenberg Sports Center without submitting the issue to voters, but subject to a reverse referendum. To qualify, the bonds must be secured by a pledge of revenues from the facility and the city must find that the bonds can be paid for through a tax levy that is not more than the levy used to pay the original bonds to finance the center.

ARTICLE 7

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 the 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.  Manufactured home park cooperative.  Changes a reference from the homestead market value credit to the homestead market value exclusion. 

Section 28.  Homestead application.  Adds a reference to the homestead market value exclusion as a homestead benefit and eliminates a reference to the credit. 

Section 29.  Classification of property; tax capacity.  Eliminates an obsolete definition of "gross tax capacity."

Section 30.  Disparity reduction aid.  Requires that taxable market value be used in computing disparity reduction aid.

Section 31.  Disparity reduction credit.  Requires that taxable market value be used in computing disparity reduction credit.

Section 32.  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 33.  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 34.  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 35.  Contents of tax statement.  Eliminates obsolete reference to limited market value and updates a cross- reference to new definition of "taxable market value."

Section 36.  Iron Range Fiscal Disparities Program, adjusted market value.  Defines "adjusted market value" under the Iron Range Fiscal Disparities Program statute.

Section 37.  Iron Range Fiscal Disparities Program, fiscal capacity.  Modifies definition of "fiscal capacity" for municipalities.

Section 38.  Iron Range Fiscal Disparities Program, average fiscal capacity.  Modifies definition of  "average fiscal capacity" for municipalities.

Section 39.  Iron Range Fiscal Disparities Program, net tax capacity.  Modifies definition of net tax capacity by changing market value to taxable market value.

Section 40.  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 41.  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 42.  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 43.  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 44.  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 45.  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 46.  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 47.  Towns may be dissolved.  Converts criteria for dissolution of town from amount of taxable market value to estimated market value.

Section 48.  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 49.  Counties; capital improvement bonds.  Removes definition of  "tax capacity."

Section 50.  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 51.  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 52.  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 53.  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 54.  Hennepin County; Building, and Maintenance Fund.  Converts levy limit from 0.02215 percent of taxable market value to estimated market value.

Section 55.  Hennepin County Library levy.  Converts levy limit from 0.01612 percent of taxable market value to estimated market value.

Section 56.  Three Rivers Park District levy.  Converts levy limit from 0.03224 percent of taxable market value to estimated market value.

Section 57.  Anoka County; library debt limit.  Converts debt limit on library bonds from 0.01 percent of taxable market value to estimated market value.

Section 58.  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 59.  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 60.  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 61.  Regional Railroad Authority; levy limit.  Converts levy limit from 0.04835 percent of taxable market value to estimated market value.

Section 62.  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 63.  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 64.  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 65.  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 66.  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 67.  Pedestrian mall; improvement assessments.  Converts levy limits for pedestrian mall improvements from 0.12089 percent of market value to estimated market value.

Section 68.  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 69.  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 70.  Museum, gallery, or school of arts.  Converts levy from 0.00846 percent of taxable market value to estimated market value.

Section 71.  St. Cloud Transit Commission levy.  Converts levy limit from 0.12089 percent of market value to estimated market value.

Section 72.  Duluth Transit Commission levy.  Converts levy limit from 0.07253 percent of taxable market value to estimated market value.

Section 73.  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 74.  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 75.  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 76.  Port authorities; mandatory city levy.  Converts levy limit from 0.01813 percent of taxable market value to estimated market value.

Section 77.  Seaway Port Authority levy.  Converts levy limit from 0.01813 percent of taxable market value to estimated market value.

Section 78.  Port authorities’ discretionary city levy.  Converts levy limit from 0.00282 percent of taxable market value to estimated market value.

Section 79.  Economic development authorities; city tax levy limit.  Converts levy limit from 0.01813 percent of taxable market value to estimated market value.

Section 80 . Tax increment financing; original net tax capacity.  Provides for adjustments to the original tax capacity of TIF districts for market value exclusions.

Section 81.  Development pacts with entities of other states.  Converts levy limit from 0.00080 percent of taxable market value to estimated market value.

Section 82.  First class city; publicity levy.  Converts levy limit from 0.00080 percent of taxable market value to estimated market value.

Section 83.  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 84.  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 85.  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 86.  City improvement fund; levy limit.  Converts levy limit from 0.08059 percent of taxable market value to estimated market value.

 Section 87.  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 88.  Metropolitan county; debt limit.  Converts debt limit from 0.01209 percent of taxable market value to estimated market value.

Section 89.  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 90.  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 91.  Metropolitan Airport Commission; additional taxes.  Converts commission’s additional levy limit from 0.00121 percent of market value to estimated market value.

Section 92.  Metropolitan Airport Commission; levy limit.  Converts commission’s levy limit from 0.00806 percent of taxable market value to estimated market value.

Section 93.  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 94.  Metropolitan Area Fiscal Disparities Program; adjusted market value.  Defines "adjusted market value" as taxable market value adjusted by the assessment sales ratio.

Section 95.  Metropolitan Area Fiscal Disparities Program; fiscal capacity.  Defines "fiscal capacity" as being based on adjusted market value.

Section 96.  Metropolitan Area Fiscal Disparities Program; average fiscal capacity.  Defines "average fiscal capacity" as being based on adjusted market value.

Section 97.  Metropolitan Area Fiscal Disparities Program; net tax capacity.  Defines "net tax capacity" as being based on taxable market value.

Section 98.  Debt of defined 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 99.  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 100.  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 101.  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 102.  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 103.  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 104.  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 105.  Commercial industrial percentage.  Clarifies that the commercial industrial percentage for the LGA formula need factor is based on estimated market value. 

Section 106.  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 107.  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 108.  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 109.  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 110.  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 111.  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 112.  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.

ARTICLE 8

MISCELLANEOUS

Section 1. Greater Minnesota internship program. 

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

     Subdivision 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.

     Subdivision 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.

     Subdivision 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 $1,250,000.

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

     Subdivision 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.

Effective July 1, 2012.

Section 2.  Liquor reporting requirements.   Exempts liquor manufacturers, distributors, or other wholesalers from providing copies of sales tax exemption certificates for the retailers to whom they sold liquor in the annual information reports required to be filed with the Department of Revenue.  Effective for reports required to be filed beginning in calendar year 2012. 

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 increase is effective for calculations based on the 2011 production year (tax credit will be available for excise tax on 2012 production).

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.  Effective the day after the governing body of Vergas and its chief clerical officer comply with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Section 5.  Border city allocations.  Allocates $250,000 for border city enterprise zone and border city development zone tax reductions.  This allocation is divided equally between the two programs ($125,000 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.

Section 6.  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.  Effective the day following final enactment.

Section 7.  Purpose statements.  Provides statements of purpose and standards of effectiveness for the tax expenditures in the bill.

Section 8.  Appropriation; greater Minnesota internship program.  Appropriates $1,000,000 in fiscal year 2013 from the general fund to the Commissioner of DEED to make grants under the academic internship program in section 1.  Provides that the base for DEED for the program beginning in fiscal year 2014 is $1,250,000.

Section 9.  Special Recovery Fund; Cancellation.  Transfers $4,000,000 of the balance in the Revenue Department service and recovery special revenue fund to the general fund in fiscal year 2012. 

Section 10.  Budget reserve.  Requires the Commissioner of Management and Budget to cancel $43,500,000 from the budget reserve in Minnesota Statutes, section 16A.152, to the general fund, to offset the payment to the centers for Medicaid and Medicare services for the federal share of the UCare donation and the net budget effect on the general fund. 

 

 

 
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