North Carolina’s county tier ranking system has long been a cornerstone of economic planning in the state, but a recent study from the University of North Carolina’s School of Government suggests that this system may be more of a blunt instrument than a precise tool.
The study, conducted under the NCGrowth initiative, points to significant shortcomings in how the system measures and categorizes the economic health of the state’s 100 counties.
In the latest rankings, Forsyth and Guilford counties have been designated as Tier 2, a drop from their previous standings.
This change highlights the frustration and confusion surrounding the tier system, which many stakeholders and researchers argue does not accurately reflect the economic realities on the ground.
Forsyth County, for instance, has slipped from 33rd to 37th in the rankings, while Guilford has fallen from 44th to 49th.
The broader implications of this are significant, as the tier system influences the distribution of state incentives and grants across counties.
The tier system, established in 1996, categorizes counties into three tiers: the 20 most prosperous counties as Tier 3, the next 40 as Tier 2, and the 40 most distressed as Tier 1.
This classification affects not only economic incentives but also eligibility for various grant programs, including the One North Carolina program and infrastructure development funds.
However, NCGrowth’s research indicates that the system’s methodology is flawed, often masking the nuanced economic conditions within counties.
Key metrics used in the rankings include average unemployment rate, median household income, population growth, and adjusted property tax base per capita.
Yet, these factors alone may not capture the full spectrum of economic health.
For instance, tourism’s impact on property tax bases in mountain and coastal counties skews perceptions of prosperity.
Additionally, the current system fails to account for factors like job and business growth, wage levels, and educational attainment, which could provide a more comprehensive picture of economic conditions.
The study recommends a revision of the criteria used in the tier system, suggesting that a more detailed approach considering regional differences and sub-county data could yield more accurate and useful insights.
This includes potentially incorporating census tracts or Zip codes to better capture economic disparities within counties.
While the tier system aims to offer incentives—such as a $3 state match for every $1 in local economic financing for Tier 1 counties—the study questions whether these financial incentives effectively promote desired economic development.
Michael Walden, a retired economics professor, emphasizes that while incentives can attract businesses, factors like location, transportation access, labor quality, and costs are more pivotal in economic development.
The study has sparked discussions about whether the tier system should be expanded to five tiers or even abandoned altogether in favor of a more tailored approach.
Despite legislative attempts to reform the system, such as House Bill 649, inertia and the entrenched nature of the current system present significant barriers to change.
Stakeholders like Mark Owens, president of Greater Winston-Salem Inc., acknowledge the monetary benefits that come with Forsyth’s Tier 2 status, which provides access to enhanced financial assistance.
Yet, Owens concedes that the tier designation’s value lies more in its financial implications than in its prestige.
As the debate over the tier system’s effectiveness continues, the call for a more nuanced and flexible approach grows louder.
The study’s findings underscore the importance of adapting economic assessment tools to reflect the complex realities of modern economies, rather than relying on outdated models that may no longer serve their intended purpose.
In the end, the question remains: Can North Carolina’s tier system evolve to meet the diverse needs of its counties, or will it remain a relic of past economic policy?
The answer may shape the state’s economic landscape for years to come, as policymakers, business leaders, and researchers seek a system that truly reflects and supports the economic health of North Carolina’s communities.
