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Bill Summary · HB 1095

Bill Summary: HB 1095 (Session 2025) – Tier System Reevaluation

Overview

  • Title: Tier System Reevaluation
  • Sponsor: Representative Reives (with several co-sponsors)
  • Jurisdiction: North Carolina
  • Purpose: To reevaluate and discontinue the use of the state development tier designations (as defined in G.S. 143B-437.08) across multiple programs and agencies, and to replace them with independently developed, objective criteria tailored to each program’s objectives.

Main Purpose and Intent

  • The bill directs State entities that currently use development tier designations for any purpose (including taxes, economic development, funding programs, and transportation project prioritization) to discontinue those designations by July 1, 2028.
  • It requires each entity to develop new, program-specific criteria intended to achieve the same or better alignment with program objectives, without expanding or contracting eligibility beyond what is necessary to replace the tier designations.
  • The act envisions improved alignment between program outcomes and criteria used to allocate resources or prioritize projects, based on transparent, verifiable data.

Key Provisions and Changes

Section 1: Discontinuation and Replacement Criteria

  • Entities affected (by name) include:
    • Department of Agriculture and Consumer Services
    • Department of Environmental Quality
    • Department of Natural and Cultural Resources
    • Department of Information Technology
    • Department of Health and Human Services
    • Department of Transportation
    • Department of Revenue
    • Department of Commerce
    • University of North Carolina
    • Department of Public Instruction
    • Community Colleges System Office
  • By July 1, 2028, these entities must stop using development tier designations for any purpose or program listed.
  • Each entity must independently develop proposed replacement criteria that:
    • Are objective and based on publicly available or verifiable data where practicable
    • Directly relate to the purpose(s) of the applicable program
    • Can be uniformly applied
    • Do not alter a program’s substantive purpose or expand/contract eligibility except as needed to replace tier designations
  • Reporting of proposed criteria due by February 1, 2027, to the designated oversight committees:
    • Agriculture and Natural and Economic Resources oversight (for several agencies)
    • Information Technology oversight committee
    • Health and Human Services oversight committee
    • Transportation oversight committee
    • Revenue Laws Study Committee
    • Any other applicable oversight committee

Section 1: Interim Use of Last Published Tiers

  • If replacement criteria are not yet enacted, entities may use the last published development tier designations to July 1, 2028, but not beyond the earlier of when replacement criteria are enacted.

Section 1: Intent

  • The General Assembly intends that independently developed, program-specific criteria more precisely tailor objectives to program outcomes compared to the current tier designations.

Section 2: Appropriation

  • A new appropriation of $1,100,000 (nonrecurring) from the General Fund to the Office of State Budget and Management (OSBM) for the 2026-2027 fiscal year.
  • Purpose: to fund the evaluation and development of substitute criteria by the affected state entities.
  • OSBM discretion to allocate funds based on the number, complexity, and funding level of the evaluated programs.

Section 3: Transitional Limitation

  • The Secretary must not change any current development tier designation for tier 1 areas or lower a tier 2 area to tier 3 for the 2026–2028 calendar years as a result of the annual ranking.
  • Counties may still move to a higher tier in any calendar year due to annual ranking.

Section 4: Effective Dates

  • Section 2 (the appropriation) becomes effective July 1, 2026.
  • The remainder of the act becomes effective when it becomes law.

Affected Parties

  • State agencies and departments currently using development tier designations for program administration, funding decisions, or project prioritization
  • University of North Carolina system
  • Community Colleges System Office
  • Programs and initiatives tied to tier designations (e.g., tax incentives, grant programs, capital funding, job training, transportation prioritization)

Procedural and Timeline Aspects

  • February 1, 2027: Agencies must report proposed replacement criteria to the appropriate oversight committees.
  • July 1, 2028: Deadline to discontinue use of development tier designations unless replaced earlier.
  • 2026–2027: Nonrecurring funding of $1.1 million allocated to OSBM to support development of replacement criteria.
  • Section 3 restricts changes to tier designations during 2026–2028 to avoid retroactive alterations in the interim period.

Potential Impacts

  • Reduction or elimination of the Development Tier framework across multiple programs and agencies.
  • Shift toward program-specific, data-driven criteria intended to more directly reflect program goals and outcomes.
  • Transitional period with potential funding and administrative adjustments as agencies design and implement new criteria.
  • Possible changes in eligibility, project prioritization, funding allocations, and evaluation metrics once replacement criteria are enacted.

Compiled from official sources — confirm details with the bill’s official record.

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