Saying the current plan is antiquated, a legislative agency on Monday recommended that the state scrap its three-tiered system for awarding economic development grants.
“The economic development tier system, which was designed to award tax incentives, has outlived its purpose,” said Sara Nienow, senior program evaluator at the General Assembly’s Program Evaluation Division, to a meeting of the Joint Legislative Program Evaluation Oversight Committee. “Measurement at the county level fails to identify struggling communities located within prosperous counties.”
Nienow urged lawmakers to form a commission and develop a new strategy to identify and assist distressed communities as a replacement for the tier system. She recommended and end to the tier system for economic development programs by July 1, 2018.
Some other state agencies and programs use the tier system for prioritizing state funds. Those include the Farmland Preservation Trust Fund, spay and neuter programs, state wastewater reserves and drinking water programs, public safety system grant programs, oral health programs, and low income housing tax credit programs.
Nienow recommended that the state stop using the tier system for those programs by July 1, 2017.
The N.C. Commerce Department currently breaks the state’s 100 counties into three tiers, with Tier 1 being the most distressed economically and Tier 3 being the least distressed. The ranking primarily takes into account a county’s average unemployment rate, median household income, percentage growth in population, and assessed property value per capita.
Sen. Don Davis, D-Greene, said the system doesn’t account for low-income communities that may be located in a wealthier county.
“There are those pockets of distressed communities that may not necessarily be part of a distressed county,” Davis said. “We can call it many things, but I really believe at the end of the day we need to address this and be more strategic in how we help communities in North Carolina succeed.”
Davis pointed to Pitt County, in eastern North Carolina, as an example.
“When you go to Bethel, N.C., and then compare that to Greenville in Pitt County, those are truly at different economic levels,” Davis said. “I think this is something that we really need to give attention to on making sure that economic resources truly have the intended benefit and on our most economically distressed communities in the state.”
In her presentation, Nienow noted a similar effect in two Iredell County cities.
Mooresville, in the southern part of Iredell County near Mecklenburg County, is faring better economically than Statesville, which is located further north in Iredell County, Nienow said.
Nienow’s recommendation got a positive reception from the committee, which instructed the staff to draft legislation to implement the recommendations.
However, Rep. Nelson Dollar, R-Wake, cautioned against moving too swiftly.
“I do think in terms of the dates that are recommended for action, I would just think that as some of this moves forward, we should determine what it is we’re going to replace the system with before we do away with it,” Dollar said.
Jeff DeBellis, director of economic and policy analysis at the Department of Commerce, also discussed potential complications if counties were separated into subgroups. He said in come cases, the amount of data is so small that it’s difficult to gauge.
DeBellis said his department is recommending cooperation among counties where a low-income community may be near the border of a more affluent county.
“We know that distress crosses county lines,” DeBellis said.
DeBellis also suggested that instead of the General Assembly establishing a new commission to replace the tier system, that lawmakers ask the Commerce Department to do it.
“We believe that the Department of Commerce is equipped to be able to handle this in a more expedient fashion,” DeBellis said. “We have a team of policy analysts and economists to help support it.
Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.