Tax break on ag repair parts advances; McCook work camp proposal stalls


January 27th, 2014

Omaha, NE — When a tractor or combine breaks down and a farmer needs a new part for it, Nebraska charges sales tax on that part. But if he or she travels just across the border to Kansas, Iowa, Missouri, South Dakota or Colorado – every neighboring state except Wyoming – the same part is tax free. That’s why Sen. Annette Dubas of Fullerton is proposing to exempt ag repair and replacement parts from sales tax. Dubas, herself a farmer, says the current policy is costing Nebraska implement dealers more than just lost sales on parts, as farmers and ranchers develop relationships with out-of-state sellers.

“If our farmers and ranchers are traveling to another state to buy repairs, they are ultimately buying their equipment there as well. These are big ticket items, costing hundreds of thousands of dollars,” Dubas said.

North Platte Sen. Tom Hansen, a rancher, cited a study that found between 1998 and 2009, Nebraska lost jobs in the farm implement field at three times the rate of its neighboring states. Lincoln Sen. Danielle Conrad supported the proposal, but cautioned against taking tax cuts too far.

“This legislation stands in sharp contrast to some of the radical and fiscally irresponsible approaches that members of this body have put forward in regards to tax policy in Nebraska this session,” Hansen said. “Make no mistake: if members seek to push those radical measures forward, we cannot and will not be able to do sound policy like this.”

In its first full year of implementation, the ag repair tax exemption is expected to reduce state revenues by a little more than $9 million. The same rationale – giving Nebraskans a tax break and making the state more competitive with its neighbors – has been offered with regard to other proposed cuts, like those to state income taxes. But because those would apply to many more people, the estimates of loss to the state treasury are expected to be much higher. Dubas’s bill got first round approval on a vote of 44-0.

The same smooth sailing didn’t happen for another measure lawmakers debated Friday, dealing with the McCook work camp. The proposal by Imperial Sen. Mark Christensen would end judges’ ability to sentence people to serve time there. Christensen said judges were not using that option enough to use the facility up to its full capacity. His bill would leave the decision of who was sent to McCook solely up to the Director of the Department of Correctional Services.

“They’re asking to be put in full control of the prison system at McCook, just like the others so they can keep the facility full, take off some of the crowding that we have,” Christensen said.

Christensen estimated another 35 prisoners could be housed at McCook. The state’s prisons currently hold about 1,600 more inmates than they were designed for, and transferring some to McCook, as well as to county jails, is part of Gov. Dave Heineman’s proposed short-term plan to relieve overcrowding. Omaha Sen. Steve Lathrop supported the bill last year. But Lathrop said Friday senators now realize how serious overcrowding is, and the bill should be held up.

“The question we have now, given the overcrowding, given what we know about the circumstances in the Penitentiary right now, or the correctional system is,  is this bill, brought to us by Corrections …a symptom of the overcrowding, or is it a good piece of legislation? We need to back up. We need to back up and have a comprehensive approach to overcrowding,” Lathrop said.

Lawmakersvoted 34-0 to delay further consideration of the bill until March 4, by which
time the Judiciary Committee will have held hearings on various proposals to deal with overcrowding. Lathrop has also introduced a resolution for a special legislative committee to study the case of Nikko Jenkins. Jenkins was released from prison last year and was later accused of killing four people in Omaha. Gov. Dave Heineman and others have said his case argues for keeping people in prison longer; critics have said the lack of mental health treatment while he was incarcerated points to a need for prison reform.



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