01/05/06 — Tier change could limit development efforts

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Tier change could limit development efforts

By Andrew Bell
Published in News on January 5, 2006 1:50 PM

Wayne County's economic ranking has improved for 2006, according to the North Carolina Department of Commerce. However, depending on who is asked, that is not necessarily good news.

"It's a double-edged sword," said Joanna Thompson, Wayne County Economic Development Commission president. "It is a sign that the economy is improving, but there is less value in assistance from state incentive programs, which could hinder our expansion or recruitment of industry."

As required by the William S. Lee Quality Jobs and Business Expansion Act, the Department of Commerce calculates the economic tier rankings annually, Mrs. Thompson said. The tiers, with one representing the most economically distressed and five being the most economically sound, are based upon average unemployment, per capita income and population growth, she said.

The county's tier ranking changed because of significant improvement in population growth, according to the department. Due to this fluctuation, Wayne County improved its ranking from the 71st to the 45th most economically distressed county, with the 100th being the most distressed.

Tier designation allows the state to determine the type of incentives or tax credits available to each county, Mrs. Thompson said. For example, Wilson County is ranked as a Tier 1 county in 2006. Due to the county's economic position, she said Wilson will receive a larger percentage of incentives.

In 2005, Wayne, as a Tier 3 county, received a $3,000 tax credit per job. However, as a Tier 4 county in 2006, that amount will decrease by $2,000, Mrs. Thompson said.

"The value is affected," she said. "A Tier 4 county receives a 25 percent decrease in the grant allotment compared to a Tier 3 county."

The new ranking could also hurt the county's chances in recruiting industry, Mrs. Thompson said.

Since the higher ranking could limit the amount of total state incentives available, Mrs. Thompson said Wayne County could lose opportunities to recruit businesses because another state's incentives could be more valuable.

And other states could offer an industry more beneficial tax credits, Mrs. Thompson. Along with both of these factors working against the county, she said the change could also require Wayne County officials to use more money to recruit industries.

"It may force the local governments to prepare for a higher percentage of assistance to make up for the state's decreased value," Mrs. Thompson said.

To create more economic autonomy from Seymour Johnson Air Force Base and to become more competitive with other regions, Commissioner Jack Best said Wayne County would need to be reclassified as a Tier 3 county.

Or, Mrs. Thompson said, the entire tier system could be reconfigured.

Although no decisions have been made to change the system, Mrs. Thompson said some state legislators question the data used to configure the tiers and the topic could be on the agenda in the next session.

"Many people do not think that five tiers are appropriate or even fair," she said. "The slightest shift can change a county's status."

Instead, Mrs, Thompson said state disbursement of incentives would be more fair in a three-tier system. The tiers would consist of a small number of metropolitan counties, a wide number of mid-ranked counties and a wide number of the poorest counties, she said. And this could help counties in need of state assistance, she said.

"The tier system should be a work tool," Mrs. Thompson said, "not a detriment."

By 2007, she said, the state could have a new tier system in place.