Certain residential homestead property state general levy establishment provision and certain cities city aid formula modifications provision

A bill for an act

relating to taxation; property; establishing a state general levy for certain residential

homestead property; modifying the city aid formula for certain cities; amending

Minnesota Statutes 2024, sections 275.025, subdivisions 1, 4, by adding

subdivisions; 477A.013, subdivision 9; 477A.03, subdivision 2a; repealing

Minnesota Statutes 2024, section 477A.013, subdivision 8.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

The state general levy is levied against

commercial-industrial property
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and
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,
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seasonal residential recreational property,
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and residential

homestead property,
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as defined in this section. The state general levy for

commercial-industrial property is $716,990,000
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for taxes payable in 2023 and thereafter
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.

The state general levy for seasonal-recreational property is $41,690,000
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for taxes payable

in 2020 and thereafter
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.
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The state general levy for residential homestead property shall be

the amount determined under subdivision 3a.
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The tax under this section is not treated as a

local tax rate under section
469.177
and is not the levy of a governmental unit under chapters

276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year as

necessary to account for errors and tax base changes that affected a preliminary or final rate

for either of the two preceding years. Adjustments are allowed to the extent that the necessary

information is available to the commissioner at the time the rates for a year must be certified,

and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal

residential recreational property reported to the commissioner under section
270C.85
,

subdivision 2, clause (4), for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax

levied for the year would be less than $100,000.

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EFFECTIVE DATE.

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This section is effective for property taxes payable in 2027 and

thereafter.

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Sec. 2.

Minnesota Statutes 2024, section 275.025, is amended by adding a subdivision to

read:

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Subd. 3a.

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Residential homestead levy amount.

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By August 1 each year, the commissioner

of revenue shall determine the amount necessary to pay city aid distributions under section

477A.013, subdivision 9, for aids payable in the following calendar year. The amount

determined, minus $644,398,012, is the levy amount for residential homestead property

under subdivision 1 and is payable in the following taxes payable year.

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EFFECTIVE DATE.

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This section is effective for property taxes payable in 2027 and

thereafter.

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Sec. 3.

Minnesota Statutes 2024, section 275.025, is amended by adding a subdivision to

read:

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Subd. 3b.

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Residential homestead tax capacity.

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For purposes of this section, "residential

homestead tax capacity" means the tax capacity of all taxable property classified as class

1a under section 273.13, subdivision 22, that has a market value exceeding $1,000,000.

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EFFECTIVE DATE.

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This section is effective for property taxes payable in 2027 and

thereafter.

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Sec. 4.

Minnesota Statutes 2024, section 275.025, subdivision 4, is amended to read:

Subd. 4.

Apportionment and levy of state general tax.

The state general tax must be

levied by applying a uniform rate to all commercial-industrial tax capacity
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and a uniform

rate to
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,
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all seasonal residential recreational tax capacity
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, and all residential homestead tax

capacity
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. On or before October 1 each year, the commissioner of revenue shall certify the

preliminary state general levy rates to each county auditor that must be used to prepare the

notices of proposed property taxes for taxes payable in the following year. By January 1 of

each year, the commissioner shall certify the final state general levy rates to each county

auditor that shall be used in spreading taxes.

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EFFECTIVE DATE.

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This section is effective for property taxes payable in 2027 and

thereafter.

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Sec. 5.

Minnesota Statutes 2024, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

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(a) In calendar year 2024 and thereafter, if a city's

certified aid for the previous year is less than its current unmet need, the city shall receive

an aid distribution equal to the sum of (1) its certified aid in the previous year, and (2) the

city formula aid under subdivision 8.

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(b) For aids payable in 2024 and thereafter, if a city's certified aid for the previous year

is equal to or greater than its current unmet need, the total aid for a city is
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Each city shall

receive an aid distribution
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equal to the greater of (1) its unmet need, or (2) the amount it

was certified to receive in the previous year minus the lesser of (i) $10 multiplied by its

population, or (ii) five percent of its net levy in the year prior to the aid distribution. No city

may have a total aid amount less than $0.

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EFFECTIVE DATE.

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This section is effective for aids payable in 2027 and thereafter.

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Sec. 6.

Minnesota Statutes 2024, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

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For aids payable in 2021 through 2023, the total aid payable under

section
477A.013, subdivision
9, is $564,398,012. For aids payable in 2024 and thereafter,

the total aid payable under section
477A.013, subdivision 9
, is $644,398,012
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An amount

sufficient to pay city aid distributions under section 477A.013, subdivision 9, is annually

appropriated from the general fund to the commissioner of revenue
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.

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EFFECTIVE DATE.

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This section is effective for aids payable in 2027 and thereafter.

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Sec. 7.
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REPEALER.
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Minnesota Statutes 2024, section 477A.013, subdivision 8,

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is repealed.

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EFFECTIVE DATE.

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This section is effective for aids payable in 2027 and thereafter.

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APPENDIX

Repealed Minnesota Statutes: 26-08187

477A.013 MUNICIPAL GOVERNMENT DISTRIBUTIONS.

Subd. 8.

City formula aid.

(a) For aids payable in 2024 and thereafter, the formula aid for a city is equal to the product of (1) the difference between its unmet need and its certified aid in the previous year, and (2) the aid gap percentage.

(b) The applicable aid gap percentage must be calculated by the Department of Revenue so that the total of the aid under subdivision 9 equals the total amount available for aid under section
477A.03
. The aid gap percentage must be the same for all cities subject to paragraph (a). Data used in calculating aids to cities under sections
477A.011
to
477A.013
shall be the most recently available data as of January 1 in the year in which the aid is calculated.