House committee substitute rewrites the 2nd edition entirely and changes the bill title to read AN ACT TO REQUIRE COMMERCE TO ASSIGN DISTRESS FACTORS TO COUNTIES.

Establishes new GS 143B-437.08A requiring the Secretary of Commerce [Secretary] to assign each county a government distress factor for purposes of determining county distress tax capacity rankings.  The distress factor shall be calculated on the following basis: 70% of the factor based on the county’s rank among counties by assessed property tax value per capita as published by the Department of Public Instruction for the most recent tax year, and 30% of the factor based on the county’s rank among counties by sales tax distributions where the rank directly correlates to the sales tax distribution per capita for the most recent fiscal year for which data is available.  Per capita statistics do not include persons incarcerated in state or federal prisons located within the county. The Secretary shall assign each county a distress factor by November 30th of each year and rank all counties from highest to lowest. By November 30th of each year, the Secretary must report the rankings along with a map of the state designating each county’s ranking to the Fiscal Research Division and the following legislative committees:  Joint Legislative Economic Development and Global Engagement Oversight, Senate and House Appropriations, Senate and House Appropriations Subcommittees on Natural and Economic Resources, and the Fiscal Research Division. 

Establishes new GS 143B-437.08B requiring the Secretary to assign each county a resident distress factor for purposes of determining county resident distress rankings. The distress factor shall be the sum of the county’s rankings in the following four categories: average annual earnings for the most recent 12 months, median household income for the most recent 12 months, percentage growth in number of jobs for the most recent 36 months, and percentage of population aged 25 or older with some college-level educational attainment or higher for the most recent 60 months. Per capita statistics do not include persons incarcerated in state or federal prisons located within the county. The Secretary shall assign each county a distress factor by November 30th of each year and rank all counties from highest to lowest. By November 30th of each year, the Secretary must report the rankings along with a map of the state designating each county’s ranking to the Fiscal Research Division and the following legislative committees: Joint Legislative Economic Development and Global Engagement Oversight, Senate and House Appropriations, Senate and House Appropriations Subcommittees on Natural and Economic Resources, and the Fiscal Research Division.

Makes legislative findings that the General Assembly should also require the Department of Commerce to publish distress ranking systems that measure local governments’ potential ability to generate revenue by measuring tax capacity and residential economic hardships to assist economic development and noneconomic development programs determine resource allocations and required local contributions where ability to pay is a factor. Also finds that annual rankings developed by the Department of Commerce are used by noneconomic development programs for programmatic criteria, making it difficult to tailor development factors solely for economic development purposes without unintended consequences on unrelated programs.

Requires various state agencies and programs, by January 1, 2019, to examine continued use of Development Tier Designations established by the Department of Commerce under GS 143B-437.08 in contrast to county distress factors. Examination must include identifying alternative program-specific criteria and reporting findings and draft legislation necessary to make modifications to specific programs. Entities continuing to use Development Tier Designations in lieu of county distress rankings must provide an analysis justifying that decision. Examination and reporting requirements apply to all entities utilizing Development Tier Designations for programmatic and tax purposes, including the following programs and agencies: North Carolina Development Farmland Preservation, Trust Fund, Spay and Neuter Program, Abandoned Manufactured Home Cleanup Grants Program, State Wastewater Reserve, State Drinking Water Reserve, Public Safety Assistance Points Grant Program, Oral Health Preventive Services, Medication Assistance, Qualified Allocation Plan for Low-Income Housing Tax Credits, Strategic Prioritization Funding Plan for Regional Impact Transportation Investment Projects, Department of Agriculture and Consumer Services, Department of Environmental Quality, Department of Information Technology, Department of Health and Human Services, North Carolina Housing Finance Agency, Department of Transportation, and Department of Revenue. Reports shall be submitted by January 15, 2019, to the Fiscal Research Division, the Joint Legislative Economic Development and Global Engagement Oversight Committee, and the respective legislative oversight committees for state agencies.

Effective when the act becomes law.