Bill Text: MN HF1782 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Taconite production tax modified, and taconite production tax proceeds dedicated to school districts.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2012-01-30 - Author added Melin [HF1782 Detail]
Download: Minnesota-2011-HF1782-Introduced.html
1.2relating to taxation; minerals; modifying taconite production tax; dedicating a
1.3portion of taconite production tax proceeds to certain school districts;amending
1.4Minnesota Statutes 2010, sections 298.24, subdivision 1; 298.28, subdivision 4.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 298.24, subdivision 1, is amended to read:
1.7 Subdivision 1. Imposed; calculation. (a) For concentrate produced in2001, 2002,
1.8and 2003 2012, there is imposed upon taconite and iron sulphides, and upon the mining
1.9and quarrying thereof, and upon the production of iron ore concentrate therefrom, and
1.10upon the concentrate so produced, a tax of$2.103 $2.662 per gross ton of merchantable
1.11iron ore concentrate produced therefrom.For concentrates produced in 2005, the tax rate
1.12is the same rate imposed for concentrates produced in 2004. For concentrates produced in
1.132009 and subsequent years, the tax is also imposed upon other iron-bearing material.
1.14 (b) For concentrates produced in2006 2013 and subsequent years, the tax rate shall
1.15be equal to the preceding year's tax rate plus an amount equal to the preceding year's tax
1.16rate multiplied by the percentage increase in the implicit price deflator from the fourth
1.17quarter of the second preceding year to the fourth quarter of the preceding year. "Implicit
1.18price deflator" means the implicit price deflator for the gross domestic product prepared by
1.19the Bureau of Economic Analysis of the United States Department of Commerce.
1.20 (c) An additional tax is imposed equal to three cents per gross ton of merchantable
1.21iron ore concentrate for each one percent that the iron content of the product exceeds 72
1.22percent, when dried at 212 degrees Fahrenheit.
1.23 (d) The tax on taconite and iron sulphides shall be imposed on the average of the
1.24production for the current year and the previous two years. The rate of the tax imposed
2.1will be the current year's tax rate. This clause shall not apply in the case of the closing
2.2of a taconite facility if the property taxes on the facility would be higher if this clause
2.3and section298.25 were not applicable. The tax on other iron-bearing material shall be
2.4imposed on the current year production.
2.5 (e) If the tax or any part of the tax imposed by this subdivision is held to be
2.6unconstitutional, a tax of $2.103 per gross ton of merchantable iron ore concentrate
2.7produced shall be imposed.
2.8 (f) Consistent with the intent of this subdivision to impose a tax based upon the
2.9weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
2.10determine the weight of merchantable iron ore concentrate included in fluxed pellets by
2.11subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
2.12flux additives included in the pellets from the weight of the pellets. For purposes of this
2.13paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
2.14olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
2.15No subtraction from the weight of the pellets shall be allowed for binders, mineral and
2.16chemical additives other than basic flux additives, or moisture.
2.17 (g)(1) Notwithstanding any other provision of this subdivision, for the first two years
2.18of a plant's commercial production of direct reduced ore from ore mined in this state, no
2.19tax is imposed under this section. As used in this paragraph, "commercial production" is
2.20production of more than 50,000 tons of direct reduced ore in the current year or in any
2.21prior year, "noncommercial production" is production of 50,000 tons or less of direct
2.22reduced ore in any year, and "direct reduced ore" is ore that results in a product that has an
2.23iron content of at least 75 percent. For the third year of a plant's commercial production of
2.24direct reduced ore, the rate to be applied to direct reduced ore is 25 percent of the rate
2.25otherwise determined under this subdivision. For the fourth commercial production year,
2.26the rate is 50 percent of the rate otherwise determined under this subdivision; for the fifth
2.27commercial production year, the rate is 75 percent of the rate otherwise determined under
2.28this subdivision; and for all subsequent commercial production years, the full rate is
2.29imposed.
2.30 (2) Subject to clause (1), production of direct reduced ore in this state is subject to
2.31the tax imposed by this section, but if that production is not produced by a producer of
2.32taconite, iron sulfides, or other iron-bearing material, the production of taconite, iron
2.33sulfides, or other iron-bearing material, that is consumed in the production of direct
2.34reduced iron in this state is not subject to the tax imposed by this section on taconite,
2.35iron sulfides, or other iron-bearing material.
3.1 (3) Notwithstanding any other provision of this subdivision, no tax is imposed
3.2on direct reduced ore under this section during the facility's noncommercial production
3.3of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
3.4production of direct reduced ore is subject to the tax imposed by this section on taconite
3.5and iron sulphides. Three-year average production of direct reduced ore does not
3.6include production of direct reduced ore in any noncommercial year. Three-year average
3.7production for a direct reduced ore facility that has noncommercial production is the
3.8average of the commercial production of direct reduced ore for the current year and the
3.9previous two commercial years.
3.10 (4) This paragraph applies only to plants for which all environmental permits have
3.11been obtained and construction has begun before July 1, 2008.
3.12EFFECTIVE DATE.This section is effective for concentrate produced in 2012
3.13and thereafter.
3.14 Sec. 2. Minnesota Statutes 2010, section 298.28, subdivision 4, is amended to read:
3.15 Subd. 4. School districts. (a)23.15 cents per taxable ton, plus the increase provided
3.16in paragraph (d), less the amount that would have been computed under Minnesota
3.17Statutes 2008, section126C.21, subdivision 4 , for the current year for that district, must be
3.18allocated to qualifying school districts to be distributed, based upon the certification of the
3.19commissioner of revenue, under paragraphs (b), (c), and (f).
3.20 (b)(i) 3.43 cents per taxable ton must be distributed to the school districts in which
3.21the lands from which taconite was mined or quarried were located or within which the
3.22concentrate was produced. The distribution must be based on the apportionment formula
3.23prescribed in subdivision 2.
3.24 (ii) Four cents per taxable ton from each taconite facility must be distributed to
3.25each affected school district for deposit in a fund dedicated to building maintenance
3.26and repairs, as follows:
3.27 (1) proceeds from Keewatin Taconite or its successor are distributed to Independent
3.28School Districts Nos. 316, Coleraine, and 319, Nashwauk-Keewatin, or their successor
3.29districts;
3.30 (2) proceeds from the Hibbing Taconite Company or its successor are distributed to
3.31Independent School Districts Nos. 695, Chisholm, and 701, Hibbing, or their successor
3.32districts;
3.33 (3) proceeds from the Mittal Steel Company and Minntac or their successors are
3.34distributed to Independent School Districts Nos. 712, Mountain Iron-Buhl, 706, Virginia,
3.352711, Mesabi East, and 2154, Eveleth-Gilbert, or their successor districts;
4.1 (4) proceeds from the Northshore Mining Company or its successor are distributed
4.2to Independent School Districts Nos. 2142, St. Louis County, and 381, Lake Superior,
4.3or their successor districts; and
4.4 (5) proceeds from United Taconite or its successor are distributed to Independent
4.5School Districts Nos. 2142, St. Louis County, and 2154, Eveleth-Gilbert, or their
4.6successor districts.
4.7 Revenues that are required to be distributed to more than one district shall be
4.8apportioned according to the number of pupil units identified in section126C.05,
4.9subdivision 1 , enrolled in the second previous year.
4.10 (c)(i)15.72 cents per taxable ton, less any amount distributed under paragraph (e),
4.11shall be distributed to a group of school districts comprised of those school districts which
4.12qualify as a tax relief area under section273.134, paragraph (b) , or in which there is a
4.13qualifying municipality as defined by section273.134, paragraph (a) , in direct proportion
4.14to school district indexes as follows: for each school district, its pupil units determined
4.15under section126C.05 for the prior school year shall be multiplied by the ratio of the
4.16average adjusted net tax capacity per pupil unit for school districts receiving aid under
4.17this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
4.18ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
4.19Each district shall receive that portion of the distribution which its index bears to the sum
4.20of the indices for all school districts that receive the distributions.
4.21 (ii) Notwithstanding clause (i), each school district that receives a distribution
4.22under sections298.018 ;
298.23 to
298.28 , exclusive of any amount received under this
4.23clause;298.34 to
298.39 ;
298.391 to
298.396 ;
298.405 ; or any law imposing a tax on
4.24severed mineral values after reduction for any portion distributed to cities and towns
4.25under section126C.48, subdivision 8 , paragraph (5), that is less than the amount of its
4.26levy reduction under section126C.48, subdivision 8 , for the second year prior to the
4.27year of the distribution shall receive a distribution equal to the difference; the amount
4.28necessary to make this payment shall be derived from proportionate reductions in the
4.29initial distribution to other school districts under clause (i). If there are insufficient tax
4.30proceeds to make the distribution provided under this paragraph in any year, money must
4.31be transferred from the taconite property tax relief account in subdivision 6, to the extent
4.32of the shortfall in the distribution.
4.33 (d) Any school district described in paragraph (c) where a levy increase pursuant to
4.34section126C.17, subdivision 9 , was authorized by referendum for taxes payable in 2001,
4.35shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the
4.36pupil units identified in section126C.05, subdivision 1 , enrolled in the second previous
5.1year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent
5.2times the district's taxable net tax capacity in the second previous year.
5.3 If the total amount provided by paragraph (d) is insufficient to make the payments
5.4herein required then the entitlement of $175 per pupil unit shall be reduced uniformly
5.5so as not to exceed the funds available. Any amounts received by a qualifying school
5.6district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general
5.7education aid which the district receives pursuant to section126C.13 or the permissible
5.8levies of the district. Any amount remaining after the payments provided in this paragraph
5.9shall be paid to the commissioner of Iron Range resources and rehabilitation who shall
5.10deposit the same in the taconite environmental protection fund and the Douglas J. Johnson
5.11economic protection trust fund as provided in subdivision 11.
5.12 Each district receiving money according to this paragraph shall reserve the lesser of
5.13the amount received under this paragraph or $25 times the number of pupil units served
5.14in the district. It may use the money for early childhood programs or for outcome-based
5.15learning programs that enhance the academic quality of the district's curriculum. The
5.16outcome-based learning programs must be approved by the commissioner of education.
5.17 (e) There shall be distributed to any school district the amount which the school
5.18district was entitled to receive under section298.32 in 1975.
5.19 (f) Four cents per taxable ton must be distributed to qualifying school districts
5.20according to the distribution specified in paragraph (b), clause (ii), and two cents per
5.21taxable ton must be distributed according to the distribution specified in paragraph
5.22(c). These amounts are not subject to sections126C.21, subdivision 4 , and
126C.48,
5.23subdivision 8 .
5.24(g) Twenty-five cents per taxable ton shall be distributed to school districts in the
5.25taconite assistance area, as defined in section 273.1341, and school districts in the region 3
5.26occupation tax area, for the purpose of the enhancement of science, math, and technology
5.27educational opportunities for pupils in elementary and secondary school. The revenues
5.28required to be distributed under this paragraph shall be apportioned to each eligible school
5.29district according to the number of pupil units identified in section 126C.05, subdivision
5.301, enrolled in the previous year.
5.31EFFECTIVE DATE.This section is effective for distributions payable in 2013
5.32and thereafter.
1.3portion of taconite production tax proceeds to certain school districts;amending
1.4Minnesota Statutes 2010, sections 298.24, subdivision 1; 298.28, subdivision 4.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 298.24, subdivision 1, is amended to read:
1.7 Subdivision 1. Imposed; calculation. (a) For concentrate produced in
1.8
1.9and quarrying thereof, and upon the production of iron ore concentrate therefrom, and
1.10upon the concentrate so produced, a tax of
1.11iron ore concentrate produced therefrom.
1.12
1.132009 and subsequent years, the tax is also imposed upon other iron-bearing material.
1.14 (b) For concentrates produced in
1.15be equal to the preceding year's tax rate plus an amount equal to the preceding year's tax
1.16rate multiplied by the percentage increase in the implicit price deflator from the fourth
1.17quarter of the second preceding year to the fourth quarter of the preceding year. "Implicit
1.18price deflator" means the implicit price deflator for the gross domestic product prepared by
1.19the Bureau of Economic Analysis of the United States Department of Commerce.
1.20 (c) An additional tax is imposed equal to three cents per gross ton of merchantable
1.21iron ore concentrate for each one percent that the iron content of the product exceeds 72
1.22percent, when dried at 212 degrees Fahrenheit.
1.23 (d) The tax on taconite and iron sulphides shall be imposed on the average of the
1.24production for the current year and the previous two years. The rate of the tax imposed
2.1will be the current year's tax rate. This clause shall not apply in the case of the closing
2.2of a taconite facility if the property taxes on the facility would be higher if this clause
2.3and section
2.4imposed on the current year production.
2.5 (e) If the tax or any part of the tax imposed by this subdivision is held to be
2.6unconstitutional, a tax of $2.103 per gross ton of merchantable iron ore concentrate
2.7produced shall be imposed.
2.8 (f) Consistent with the intent of this subdivision to impose a tax based upon the
2.9weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
2.10determine the weight of merchantable iron ore concentrate included in fluxed pellets by
2.11subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
2.12flux additives included in the pellets from the weight of the pellets. For purposes of this
2.13paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
2.14olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
2.15No subtraction from the weight of the pellets shall be allowed for binders, mineral and
2.16chemical additives other than basic flux additives, or moisture.
2.17 (g)(1) Notwithstanding any other provision of this subdivision, for the first two years
2.18of a plant's commercial production of direct reduced ore from ore mined in this state, no
2.19tax is imposed under this section. As used in this paragraph, "commercial production" is
2.20production of more than 50,000 tons of direct reduced ore in the current year or in any
2.21prior year, "noncommercial production" is production of 50,000 tons or less of direct
2.22reduced ore in any year, and "direct reduced ore" is ore that results in a product that has an
2.23iron content of at least 75 percent. For the third year of a plant's commercial production of
2.24direct reduced ore, the rate to be applied to direct reduced ore is 25 percent of the rate
2.25otherwise determined under this subdivision. For the fourth commercial production year,
2.26the rate is 50 percent of the rate otherwise determined under this subdivision; for the fifth
2.27commercial production year, the rate is 75 percent of the rate otherwise determined under
2.28this subdivision; and for all subsequent commercial production years, the full rate is
2.29imposed.
2.30 (2) Subject to clause (1), production of direct reduced ore in this state is subject to
2.31the tax imposed by this section, but if that production is not produced by a producer of
2.32taconite, iron sulfides, or other iron-bearing material, the production of taconite, iron
2.33sulfides, or other iron-bearing material, that is consumed in the production of direct
2.34reduced iron in this state is not subject to the tax imposed by this section on taconite,
2.35iron sulfides, or other iron-bearing material.
3.1 (3) Notwithstanding any other provision of this subdivision, no tax is imposed
3.2on direct reduced ore under this section during the facility's noncommercial production
3.3of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
3.4production of direct reduced ore is subject to the tax imposed by this section on taconite
3.5and iron sulphides. Three-year average production of direct reduced ore does not
3.6include production of direct reduced ore in any noncommercial year. Three-year average
3.7production for a direct reduced ore facility that has noncommercial production is the
3.8average of the commercial production of direct reduced ore for the current year and the
3.9previous two commercial years.
3.10 (4) This paragraph applies only to plants for which all environmental permits have
3.11been obtained and construction has begun before July 1, 2008.
3.12EFFECTIVE DATE.This section is effective for concentrate produced in 2012
3.13and thereafter.
3.14 Sec. 2. Minnesota Statutes 2010, section 298.28, subdivision 4, is amended to read:
3.15 Subd. 4. School districts. (a)
3.16in paragraph (d), less the amount that would have been computed under Minnesota
3.17Statutes 2008, section
3.18allocated to qualifying school districts to be distributed, based upon the certification of the
3.19commissioner of revenue, under paragraphs (b), (c), and (f).
3.20 (b)
3.21the lands from which taconite was mined or quarried were located or within which the
3.22concentrate was produced. The distribution must be based on the apportionment formula
3.23prescribed in subdivision 2.
3.24 (ii) Four cents per taxable ton from each taconite facility must be distributed to
3.25each affected school district for deposit in a fund dedicated to building maintenance
3.26and repairs, as follows:
3.27 (1) proceeds from Keewatin Taconite or its successor are distributed to Independent
3.28School Districts Nos. 316, Coleraine, and 319, Nashwauk-Keewatin, or their successor
3.29districts;
3.30 (2) proceeds from the Hibbing Taconite Company or its successor are distributed to
3.31Independent School Districts Nos. 695, Chisholm, and 701, Hibbing, or their successor
3.32districts;
3.33 (3) proceeds from the Mittal Steel Company and Minntac or their successors are
3.34distributed to Independent School Districts Nos. 712, Mountain Iron-Buhl, 706, Virginia,
3.352711, Mesabi East, and 2154, Eveleth-Gilbert, or their successor districts;
4.1 (4) proceeds from the Northshore Mining Company or its successor are distributed
4.2to Independent School Districts Nos. 2142, St. Louis County, and 381, Lake Superior,
4.3or their successor districts; and
4.4 (5) proceeds from United Taconite or its successor are distributed to Independent
4.5School Districts Nos. 2142, St. Louis County, and 2154, Eveleth-Gilbert, or their
4.6successor districts.
4.7 Revenues that are required to be distributed to more than one district shall be
4.8apportioned according to the number of pupil units identified in section
4.9subdivision 1
4.10 (c)(i)
4.11shall be distributed to a group of school districts comprised of those school districts which
4.12qualify as a tax relief area under section
4.13qualifying municipality as defined by section
4.14to school district indexes as follows: for each school district, its pupil units determined
4.15under section
4.16average adjusted net tax capacity per pupil unit for school districts receiving aid under
4.17this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year
4.18ending prior to distribution to the adjusted net tax capacity per pupil unit of the district.
4.19Each district shall receive that portion of the distribution which its index bears to the sum
4.20of the indices for all school districts that receive the distributions.
4.21 (ii) Notwithstanding clause (i), each school district that receives a distribution
4.22under sections
4.23clause;
4.24severed mineral values after reduction for any portion distributed to cities and towns
4.25under section
4.26levy reduction under section
4.27year of the distribution shall receive a distribution equal to the difference; the amount
4.28necessary to make this payment shall be derived from proportionate reductions in the
4.29initial distribution to other school districts under clause (i). If there are insufficient tax
4.30proceeds to make the distribution provided under this paragraph in any year, money must
4.31be transferred from the taconite property tax relief account in subdivision 6, to the extent
4.32of the shortfall in the distribution.
4.33 (d) Any school district described in paragraph (c) where a levy increase pursuant to
4.34section
4.35shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the
4.36pupil units identified in section
5.1year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent
5.2times the district's taxable net tax capacity in the second previous year.
5.3 If the total amount provided by paragraph (d) is insufficient to make the payments
5.4herein required then the entitlement of $175 per pupil unit shall be reduced uniformly
5.5so as not to exceed the funds available. Any amounts received by a qualifying school
5.6district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general
5.7education aid which the district receives pursuant to section
5.8levies of the district. Any amount remaining after the payments provided in this paragraph
5.9shall be paid to the commissioner of Iron Range resources and rehabilitation who shall
5.10deposit the same in the taconite environmental protection fund and the Douglas J. Johnson
5.11economic protection trust fund as provided in subdivision 11.
5.12 Each district receiving money according to this paragraph shall reserve the lesser of
5.13the amount received under this paragraph or $25 times the number of pupil units served
5.14in the district. It may use the money for early childhood programs or for outcome-based
5.15learning programs that enhance the academic quality of the district's curriculum. The
5.16outcome-based learning programs must be approved by the commissioner of education.
5.17 (e) There shall be distributed to any school district the amount which the school
5.18district was entitled to receive under section
5.19 (f) Four cents per taxable ton must be distributed to qualifying school districts
5.20according to the distribution specified in paragraph (b), clause (ii), and two cents per
5.21taxable ton must be distributed according to the distribution specified in paragraph
5.22(c). These amounts are not subject to sections
5.23subdivision 8
5.24(g) Twenty-five cents per taxable ton shall be distributed to school districts in the
5.25taconite assistance area, as defined in section 273.1341, and school districts in the region 3
5.26occupation tax area, for the purpose of the enhancement of science, math, and technology
5.27educational opportunities for pupils in elementary and secondary school. The revenues
5.28required to be distributed under this paragraph shall be apportioned to each eligible school
5.29district according to the number of pupil units identified in section 126C.05, subdivision
5.301, enrolled in the previous year.
5.31EFFECTIVE DATE.This section is effective for distributions payable in 2013
5.32and thereafter.
