A state Senate bill has been reintroduced that would increase from three to five the number of economic tiers in North Carolina.
Senate Bill 491 would create the following tiers: the top-20 counties; counties 21 to 40; 41 to 60; 61 to 80; and 81 to 100.
State law requires Commerce officials to annually rank the economic health of all 100 counties.
The current system ranks the 20 most prosperous counties as Tier 3, the next 40 as Tier 2 and the 40 most distressed as Tier 1.
Forsyth and Guilford counties are currently ranked as Tier 2 counties. Watauga County is the lone Tier 3 in the 14-county region of the Triad and Northwest N.C.
It’s unclear how much support the shift has in the General Assembly.
The same economic-tier language was filed during the 2019 session as Senate Bill 597. It was not addressed at the committee level.
Tier designations determine eligibility for Commerce Department grant programs.
Tier rankings are based primarily on an assessment of each county’s unemployment rate, median household income, population growth and assessed property valuation per capita.
The adjusted property valuation per capita on vacation properties is a major reason why some coastal and mountain counties have a higher rankings than their neighbors.
“This tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state,” Commerce said.
Tier designations determine eligibility for Commerce grant programs that include building reuse, water and sewer infrastructure, and the downtown revitalization Main Street program.
For example, in October 2018 Forsyth received a $200,000 state Rural Infrastructure Authority grant toward assisting The Grass America Inc. with a 74,000-square-foot expansion project in Kernersville.
“The Tier 2 designation is generally reflective of the entire Triad region, which has been under-performing relative to the other major population centers of the Research Triangle and Charlotte,” said Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University.
The state’s top economic-recruitment tool, the Job Development Investment Grant, was adjusted during the 2015 legislative session with the tiers in mind.
For Tier 1 counties, the state provides $3 for every $1 in local economic financing. Tier 2 counties get $2 for every $1 provided locally, and Tier 3 counties continue to get a $1 for $1 match.
Companies adding jobs in a Tier 2 county are eligible for a tax credit of $5,000 for each job, while in Tier 3 counties companies are eligible for just a $750 tax credit for each job.
Michael Walden, an economics professor at N.C. State University, said research shows the tier designations are important.
“But they are trumped by such basic factors as education and training of the workforce, the transportation network, land and construction costs and the location of supportive cluster firms,” Walden said.