CVS Caremark Corp. negotiated $4 million in state incentives to build a $90-million regional distribution center in upstate New York.

The politicians in New York gushed this week when they announced 600 new jobs for administrators, safety officers and laborers. CVS executives said the public/private partnership would help the company and region prosper. Nobody raised an eyebrow.

And why would they?

This is the way economic development gets done across the country. A corporation has jobs. The government has giveaways or tax breaks. They woo each other, get married and everybody lives happily ever after.

Except nobody checks back to see if the incentives really accomplished what they set out to achieve.

But now, Rhode Island has started to take a peek.

The state is collecting detailed data on a variety of tax breaks to see how they worked.

For example, Journal staff writer Neil Downing reported that under one tax credit, called the Rhode Island Jobs Development Act, 11 companies cut their corporate income tax rates and reduced their payments by a total of $16 million for the year that ended June 30, 2008. In general, the companies won the tax breaks by creating at least 50 jobs that pay $11 an hour or more and meeting other criteria.

Most of the $16 million went to Woonsocket-based CVS, the biggest publicly traded company in Rhode Island that over the years has created thousands of jobs in the state.

But are they the type of jobs Rhode Island really wants to create for its knowledge-based economy? And at a time of slumping state revenues and deep spending cuts, is Rhode Island getting the best bang for its bucks?

To his credit, state Rep. Steven Costantino, chairman of the House Finance Committee that plays a key role in setting Rhode Island’s tax and spending policies, is asking those questions. He has filed a bill to change the tax credits designed to create jobs by allowing the break only if a business creates jobs that pay at least $18.50 an hour and carry health insurance and retirement benefits.

Costantino is quick to point out that he is not criticizing CVS, one of the state’s largest employers and charitable givers. But he says he is trying to encourage the creation of higher paying jobs that are keys to building a new economy. To prosper, the state needs more researchers in science labs, not only clerks at pharmacies and call-center operators.

Good for him. He’s pushed the debate forward.

His questions, based on the data collected by the state, are the next step in the process that started with legislation approved by the General Assembly to start compiling the amounts of several tax breaks and the names of companies that received them. As the information has been collected, state administrators have prepared reports and made them public.

All those are steps in the right direction.

Now the debate has to happen among people who write the laws, followed by decisions about what to keep, change or do away with.

One key player in the debate is Gary Sasse, who for years has endorsed the study of tax breaks. When he ran the Rhode Island Public Expenditure Council, he advocated tax breaks that are accountable, transparent and targeted toward specific types of jobs. As head of the state Department of Revenue, he pushed forward the collection of data. He also headed the tax reform panel created by Governor Carcieri that advocated a study of job-creation tax credit and questioned why they shouldn’t be reserved for higher-paying jobs with benefits.

But now, in his additional role as head of the Department of Administration, he seems less aggressive.

In response to the Costantino bill, he called the effort commendable but said revising the tax break for jobs creation is a very complex issue that warrants further study. The issue is further complicated, he said, by the state’s high unemployment rate of 11.1 percent and that the bulk of the jobs development tax breaks go to one company.

I understand his caution.

But this is exactly the time to dig into the tax breaks because state revenues are falling and deficits are growing as the downturn deepens. State leaders should be setting the groundwork for a recovery with progressive policies that encourage a type of economy in which Rhode Islanders can benefit in the long term.

Sure, the state is in recession and there is already a lot going on at the State House. Governor Carcieri, Sasse’s boss, has set clear goals to phase out the corporate income tax, realign personal income tax rates and increase the estate tax exemption to make Rhode Island more business friendly and competitive with neighboring states.

But there should also be time for a tax breaks discussion now, especially when state leaders have almost unanimously agreed that the state’s economic development policy, and the agency that executes it, must be reorganized and refocused with a clear strategy.

And the debate should not be just about the jobs development tax credit. Other incentives are allowed for companies that operate in distressed areas or meet criteria for innovation and growth. They are costing millions in lost tax revenue without a clear analysis of how well they are working, or if they work at all.

State leaders already have studied tax breaks that include the production of movies and TV shows in the state, and another for the rehabilitation of historic buildings. And they have made changes.

But there is more work to be done.

The reward will be a well-defined, complete economic development plan that yields the best return for taxpayers. Rhode Island needs that now more than ever.

jkostrze@projo.com