North Carolina Should Discontinue the Economic Development Tiers System and Reexamine Strategies to Assist Communities with Chronic Economic Distress (December 2015)

The economic development tiers system ranks North Carolina counties according to an index of economic measures and low-population/high-poverty adjustments. The Department of Commerce assigns each county a designation of Tier 1, Tier 2, or Tier 3, with Tier 1 counties being the most economically distressed. The system was created to distribute business tax incentives, but that program expired in 2014, and currently the only incentives awarded through its use are discretionary grants. Fifteen state programs use the tiers system to distribute resources but these programs are not directing more resources to the most economically distressed areas. The system has been altered incrementally during the past 30 years but components of its formula still distort identification of economic distress. The General Assembly should discontinue the economic development tiers system for all non-economic development programs by July 1, 2017; sunset the system for all economic development programs as of July 1, 2018; and form a legislative commission to reexamine the State’s strategy for identifying and assisting economically distressed communities.

Final Report

Executive Summary




Relevant Legislation:

  • House Bill 795 (2017–18): An act to make certain changes to economic development incentives of the State and to the use of development tiers and rankings. This legislation was not enacted.
  • House Bill 1082/Senate Bill 844 (2015–16): An act to eliminate the use of the economic development tier structure. This legislation was not enacted.

Press Coverage: