AN ACT to reevaluate the development tier system.

The General Assembly of North Carolina enacts:

SECTION 1.(a)  Departments, Authorities, and other State and local entities using the development tier designations determined pursuant to G.S. 143B‑437.08 for any purpose or program, including taxes, economic development, the Agricultural Development and Farmland Preservation Trust Fund, the Spay and Neuter Program, the NC Career Coach Program, the Qualified Zone Academy Bond Program, the Needs‑Based Public School Capital Fund, the Primary Care Medicine and Psychiatry Targeted Assistance Program, the Tri‑Share Child Care Pilot Program, the Shallow Draft Navigation Channel and Aquatic Weed Fund, the NC Science Museum Grant Program, the Growing Rural Economies with Access to Technology Program, and transportation project prioritization processes, shall, no later than July 1, 2028, discontinue the use of such designations. Governmental entities affected by this section include the following:

(1)        The Department of Agriculture and Consumer Services.

(2)        The Department of Environmental Quality.

(3)        The Department of Natural and Cultural Resources.

(4)        The Department of Information Technology.

(5)        The Department of Health and Human Services.

(6)        The Department of Transportation.

(7)        The Department of Revenue.

(8)        The Department of Commerce.

(9)        The University of North Carolina.

(10)      The Department of Public Instruction.

(11)      The Community Colleges System Office.

SECTION 1.(b)  Each entity to which subsection (a) of this section applies shall independently develop proposed replacement criteria designed to achieve the objectives of all tier system programs for which that entity is responsible, to be used in place of development tier designations. The proposed criteria developed pursuant to this subsection shall be objective, based on publicly available or otherwise verifiable data, where practicable, directly related to the purpose or purposes of the applicable program or programs, and capable of uniform application. The proposed criteria developed shall not alter the substantive purpose of any program or expand or contract eligibility except as necessary to replace the use of the development tier designations. No proposed criteria developed pursuant to this section shall be implemented until it is enacted by an act of the General Assembly. Each entity shall report by February 1, 2027, the developed criteria to the Fiscal Research Division and as follows:

(1)        The Departments of Agriculture and Consumer Services, Environmental Quality, Natural and Cultural Resources, and Commerce to the Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources.

(2)        The Department of Information Technology to the Joint Legislative Oversight Committee on Information Technology.

(3)        The Department of Health and Human Services to the Joint Legislative Oversight Committee on Health and Human Services.

(4)        The Department of Transportation to the Joint Legislative Transportation Oversight Committee.

(5)        The Department of Revenue to the Revenue Laws Study Committee.

(6)        Any other entity to the oversight committee having jurisdiction over the primary purpose of the entity.

SECTION 1.(c)  Notwithstanding G.S. 143B‑437.08(c), an entity required to discontinue use of the development tier designations no later than July 1, 2028, as required by this section, may use the last development tier designations published by the Department of Commerce until the earlier of developed replacement criteria or July 1, 2028.

SECTION 1.(d)  It is the intent of the General Assembly, using program‑specific, independently developed criteria developed by State agencies pursuant to this section, to enact those criteria to better tailor program objectives to programmatic outcomes when compared to the current use of the development tier designations.

SECTION 2.  There is appropriated from the General Fund to the Office of State Budget and Management (OSBM) the sum of one million one hundred thousand dollars ($1,100,000) for the 2026‑2027 fiscal year in nonrecurring funds to be allocated to State entities required by this act to discontinue the use of the development tier designations determined pursuant to G.S. 143B‑437.08 and to independently develop substitute criteria designed to achieve each program's objectives to be used in lieu of such designations. OSBM shall, in its discretion, allocate the funding based on the number, complexity, and funding of the programs evaluated by each State entity.

SECTION 3.  Notwithstanding G.S. 143B‑437.08, the Secretary shall not change the current designation for a development tier one area or lower a development tier two area to a development tier three area for the 2026, 2027, or 2028 calendar years as a result of the annual ranking. Nothing in the section prohibits a county from moving to a higher development tier area in any calendar year as a result of the annual ranking.

SECTION 4.  Section 2 of this act becomes effective July 1, 2026. The remainder of this act is effective when it becomes law.