5.10. SR 05-08-1995 - Laserfiche WebLink

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Summary of omnibus House tax bill Article 1 (Income and Franchise Tax) includes interest earnings on state bonds issued before July 1, 1995 as taxable income. Interest earnings on municipal bonds state bonds issued before July 1, 1995 and bonds of Minnesota Indian tribes are not included in taxable income. Article 2 (Sales and Excise Tax) includes a provision that expands the permissible uses for the lodging tax within the city of Winona and allows the city of Hutchinson to impose a local general sales tax of one. half of one percent if approved by the voters in a referendum. Article 3 (Property Tax) clarifies the tax treatment of park trailers so that those trailers not moved onto a highway during the year are treated as personal property for tax purposes rather than subject to the motor vehicle registration tax. The article includes a provision that would apply a four percent class rate to commercial and industrial property structures built after January 2, 1996 that are located within one-quarter mile of a bus route within the metropolitan urban service area. Certain wind energy properties would be taxed as personal property. In cities under 5,000 population the property class rate for apartments with four or more units would be reduced from 3.4 percent to 2.3 percent for taxes payable in 1°996 and thereafter. This reduction would. not be accompa- nied by additional HACA to offset the property tax shifts. The trut taxation notice would be changed by specifym hg eat portportion of school district property tax that is determined by the state and removing the esti- mated percentage increase in Minne- sota personal income. A rental tax equity pilot project would be estab- lished in Brooklyn Park for payable 1996 only. The pilot project would provide a property tax credit. for properties that meet certain eligibility requirements. The Commissioner of Revenue would conduct a study Apri128, 1995 looking at the property tax implica- tions of reducing apartment class rates. Article 4 (Senior Citizen Prop- erty Tax Deferral) includes a property tax deferral for senior citizens with total household incomes of less than $30,000. Seniors would have to apply to the Commissioner of Revenue for the deferral. Qualifying applicants would only be allowed to defer the property tax on their homestead that exceeds five percent of their household income. Interest would be charged on the deferred taxes and the state would reimburse local governments for the deferred amount of the property tax. Article 5 (Property Tax Refund as a Deduction on the Property Tax Statement) provides that the regular circuit breaker and special property tax refunds for homeowners will be shown as deductions on the individual's property tax statement. Article 6 (Credit for Seasonal Recreational Property) would extend the circuit breaker property tax credit program to owners of commercial seasonal recreational property (cabin) property. This refund would be in addition to the regular property tax refund allowed to individuals as homeowners or renters. Article 7 (Tax Increment Fin~ncin) would restrict the use of sot s districts to contamination and pollution clean up only, would expand the '`but for" test to require a cost benefit analysis before the approval of the district, would limit pooling of TIF revenues to i0 percent of the incre- ments,. would require expanded financial reporting disclosure, and would require developers to repay all or part of the TIF assistance if they sell the property or fail to carry out the identified development activities. Special laws that authorize the extension. of the duration of a district would require the state aid offset to apply to the district. Economic development district findings would require that the TIF be used to discour- age the relocation of a business to another state and the TIF would increase the employment or tax base of the state. Pre-1990 districts would be restricted by allowing increment revenue to be used only for the retirement of bonds sold before July 1, _,~ 1995, to pay for pen mg_ rp oiects or / which resolutions have been assed by July 1, 1 , or or-costs identified by a plan adopted a municipali_ ty before December 31, 1995. Special laws that. exten t e uration limit of a T'IF district would have to be approved by the city, school district, and county. The Metropolitan Council would study the uses of TIF and its impact on land use patterns in the Twin Cities metro- politan area. Article 8 (Budget Reserve) would reduce the state's budget reserve from $360 million to $350 million and would place an overall state debt service limitation equal to three percent of the total nondedicated general fund revenues for tine Bien- nium. The amount of general obliga- lion debt plus any revenue bond debt for the Cambridge bank case would be limited to 2.5 percent of total personal income in the state. Article 9 (Miscellaneous) would create a local government efficiency and effectiveness review panel. The panel would be comprised of five members of the Senate and five members of the House. The panel would review applications from cities over 5,000 population in the metro area for five percent of their local government aid distribution. The LGA distribution for the city of Pillager would be increased by $40,000 for 1995 and later years. The insurance premium tax rate would be increased on automobile insurance and. fire, lightning, sprinkler and extended coverage. The increased proceeds of the tax would be used to support fire and police pensions. ~1 Page 7