The Nebraska Legislature advanced a bill Friday on a 44-0 vote to exempt from Nebraska sales tax repair or replacement parts for agricultural machinery and equipment.

"I believe in this bill, not because of who the obvious beneficiaries may be, the farmers and the ranchers, but because of what it means to our implement dealers all across the state, and especially those who are located along our borders," said Sen. Annette Dubas of Fullerton.

Dubas made the case for her bill (LB96), which was introduced in the 2013 session. She had either introduced or co-signed other variations of the bill every year since 2007. Those bills did not make it out of committee, she said.

Nebraska is one of only eight states that still charge a sales tax on ag repairs and parts. All neighboring states except Wyoming are tax exempt. That creates a distinct competitive disadvantage, Dubas said.

Nebraska farm implement dealers along the borders lost 16.3% of their jobs, compared to 5.8% from the interior of the state, Dubas said.

Dealers are no longer located in Brown, Furnas, Dixon and Johnson counties, and that's a loss of about $900,000 in annual payroll for those counties, she said.  

If the state had maintained its 1998 share of the region's equipment dealers, it would have meant jobs for more than 3,900 workers in 2009, she said. But the state has lost 283 employees and more than $5 million in wages.

Profit margins for farms and ranches are slim, so shopping around to save dollars is a part of running a profitable farm or ranch, Dubas said.

A producer will travel additional miles to avoid paying higher prices than result from sales taxes. And if they are traveling to another state for repairs and parts, many are buying their equipment there, as well, she said.

Keeping more young people in the state is also at risk.

"We frequently talk about the importance of job creation and how we can find opportunities to keep our young people right here at home in Nebraska," she said.

Nebraska community colleges are training students to repair farm equipment and to work in parts departments. Major companies are offering scholarships and good paying jobs after graduation, Dubas said.

While senators have been hesitant to consider more tax exemptions, exempting this sales tax is one of the recommendations of the Tax Modernization Committee, and one heard consistently in hearings the committee conducted across the state, said committee Chairman Galen Hadley.

The bill is important, and an economic development tool, he said. Ag producers are in a tight market and compete against those in other states.

Sen. Tom Carlson of Holdrege said the bill is timely and would help keep business in Nebraska with equipment dealers. Grain prices are down and there will be a change this year.

"I think more farmers that have been trading equipment rather regularly, are going to think more about repairing rather than replacing," Carlson said. "And when this happens there's going to be bigger pressure on repair and repair parts, repair labor."