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Local News - April 2002

Lincoln fares poorly in getting incentive money

By ALICE SMITH, LTN Staff Writer

April 24, 2002 - Sixty-three of North Carolina’s 100 counties receive more state incentives than Lincoln.

This is a result of county tier designations, mandated by the General Assembly. State officials say it’s supposed to “level the playing field” but some Lincoln County officials say it’s unfair and ineffective.

Tier designations determine the amount of tax credits for job creation, worker training and investment in machinery and equipment, according to “Commerce Today,” the monthly newsletter of the State Department of Commerce.

There are three main factors that determine in which tier a county falls:  population growth, unemployment and per capita income. There are also a number of exceptions and alterations in the formula.

The rankings in each category are added together, and that final number is called a distress score.  A county can have a distress score of 1-100, with 100 being the most distressed.

Counties are then divided into five tiers. The higher the distress score, the lower the tier.  Low tiers receive more state incentives. 

Lincoln County falls into Tier 4.  Businesses in Tier 4 receive a $1,000 tax credit per new job created. Tier 1 businesses receive $12,500.

Barry Matherly, executive director of the Lincoln Economic Development Association, said the purpose of tier designations was to entice new businesses to less prosperous counties.

For example, a business choosing between Gaston (Tier 3) and Mecklenburg (Tier 5 would  likely choose Gaston, because it’s in a lower tier and can offer more incentives.

“It levels the playing field,” Melinda Pierson, a spokesperson for the Department of Commerce, said.

Matherly said he doesn’t feel as though the system works the way it is supposed to.

“It is ineffective,” Matherly said.

Matherly said one problem with the system is the assumption that prospective business owners are looking to relocate only in North Carolina.

Neighboring states do not operate using the tier system, which means each county gets an equal amount of state incentives. This is appealing to business owners.

“We’re not just competing with Tier 1 counties,” Matherly said.  “We’re competing with Richmond, Knoxville and Columbia.”

Matherly said that relocation is a business decision which includes many factors.  Making a product or serving customers is more important to a business than state incentives.

“If you’re a distributor and you bring in 200 trucks a day, you’re going to want to be near an interstate,” Matherly said.  “You cannot be 38 miles off an interstate in the mountains. No matter how much money they’re going to give you to operate there, it would negate all those incentives.”

Rep. Dan Barefoot said the incentives are not a final deciding factor for businesses.

“It’s not a make-or-break thing,” he said. “It helps in making an appeal, but it’s not the ultimate deciding point.”

Matherly said he doesn’t think there should be a tier system at all, but if there has to be one, it should be fair.  Although he said measurement by population growth, unemployment and per capita income is OK,  he doesn’t agree with the extra clauses that modify initial rankings.

For example, according to “Commerce Today,” “counties with a population of less than 12,000 and a poverty rate greater than 16 percent are designated as Tier 1, regardless of distress ranking.”

Matherly said political agendas affect a county’s ranking.

“There’s no rhyme or statistical reason those numbers were picked,” Matherly said.  “Those were made to get certain counties in certain tiers.”

Matherly said Lincoln is in a high tier for a few reasons. First, it’s a growing county.  Second, the per capita income is high because of wealthier residents in the eastern part of the county near Lake Norman.

“(The system) is certainly not fair to Lincoln county,” Barefoot said.  “If Gaston and Catawba are Tier 3, we should be Tier 3.”

Pierson said the state is constantly evaluating the program.

“There are studies that show it is successful,” she said.  “But we need to know if it’s the most effective tool.”

Matherly said unless there is a way to put a fair and effective tier system in place, there should not be one.  

“It seems as though as you try to improve your community, the system works in reverse to give you less,” he said.  “So if you didn’t try to improve your community, you’d actually get more.”

© 2001 Lincoln Times-News  

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