Economic incentives are again in the spotlight after Google was promised as much as $260 million in tax breaks and other perks to create 210 jobs.

A top lawmaker, Senate leader Marc Basnight, will begin a review this week of recruiting deals and incentive policies to ensure that the state gets more than it gives. Officials with the N.C. Commerce Department and Caldwell County, where Google will invest up to $600 million in a data center, say the project passes the test.

But figuring out just how much a deal like Google costs and how much it will benefit the community and the state is difficult.

A Commerce analysis, completed before officials awarded a $4.8 million grant to Google, shows a net benefit to North Carolina of $37.15 million over 12 years.

That report, based on the department's standard economic model, doesn't consider all potential revenue or the value of state and local tax breaks.

Officials in Caldwell County and Lenoir, the city where Google is building, have promised to cut most of the company's tax bill for 30 years, a move that one public estimate shows could lead the community to forgo $165 million.

Legislators also passed a measure last year exempting Google from sales tax on the electricity and equipment it purchases in North Carolina. Sen. David Hoyle, a Gaston Democrat and one of the sponsors of the state bill, said last week that he did not know the full scope of the local incentives at the time.

The length of those local tax breaks, and thus their potential value, have drawn scrutiny from those who study recruiting.

"For it to be 30 years is surprising, especially for something in the technology field," said Terry Clower, associate director of an economic research center at the University of North Texas.

"What was a data center 30 years ago?" he asked. "What's the chance that entity will be anything or even exist in 30 years?"

Nowhere in public records released by the state is a concise accounting for all the concessions and advantages related to Google or an explanation of the duration of the local tax breaks.

Quality of assumptions

Documents generated by Lenoir and Caldwell leaders -- who doubled the length of the tax breaks early last year -- are expected to be made public later this month. Even with all information, calculating the costs and benefits is a tricky exercise.

To make the assessments, officials make assumptions about a number of factors, including the jobs a company will create and how many others will be generated by suppliers, vendors, retailers and other employers as a result of the company's presence.

The Commerce review of Google, for instance, assumes that 1,682 jobs will be created in the state this year because the company is locating in Caldwell County. That includes those Google hires and those hired by construction and other companies doing work because of Google.

Commerce has no way of knowing how many jobs will actually be created. Its computer software produces estimates based on several inputs.

Plug in different assumptions or switch to a different model and the results can vary widely.

The Dell disagreements

When North Carolina worked to recruit a Dell computer plant to Forsyth County in 2004, for instance, the state's jobs estimates were about double those of Virginia, which also competed for the plant.

Virginia officials estimated that Dell, its suppliers and others would bring about 4,113 new jobs. North Carolina estimated 8,086.

That also was much higher than an estimate produced in the Winston-Salem region. A UNC-Greensboro professor estimated the total jobs, if the plant came to Guilford County, to be between 4,911 to 6,320.

"There's a lot of reasons why numbers between two different studies could vary," said Andrew Brod, the Greensboro professor. "A lot depends on the judgments, decisions and assumptions made by the analyst."

So far, Dell has created 1,100 full-time jobs at the factory and is ahead of schedule on hiring plans, said Donna Oldham, a company spokeswoman. She could not say how many jobs have been created by suppliers.

Economic developers are interested in having studies done in advance, "but nobody is interested" afterward, Brod said. If the projected benefits don't prove true, "then they might wish they hadn't spent the money" on a report.

The Commerce Department analysis of Google only goes out 12 years because that's the length of the grant that it awarded the company. It shows an estimated 1,615 construction jobs this year as workers begin building the company's new facility.

In public comments, Google officials have said they expect only about 400 on site.

Further complicating the analysis of Google are the tax breaks. Their actual value depends on how much Google invests. The total could approach $260 million over 30 years, but it will be less if Google makes a smaller investment, and higher if the company invests more.

Value of tax breaks

One Google executive said estimating the tax breaks was unnecessary. Governments are not collecting tax revenue from Google now, he argued, and if they didn't waive its tax bill the company would have gone elsewhere. So state and local leaders don't lose anything once Google comes.

The value of the tax breaks "really is a hypothetical," Rhett Weiss, a Google executive, wrote in a May e-mail message to Commerce General Counsel Don Hobart.

Unlike upfront cash payments, tax breaks also have a self-regulating mechanism: companies only get the benefit if they invest.

Even so, critics say that such perks are unfair because they transfer costs to other taxpayers.

"There's a certain level of services that any business will consume," said Clower, the Texas professor. In effect, he said, such tax breaks tell other businesses and individuals, "We want to get Google and we like Google's name, so you have to pay for it."

He prefers states and communities include benchmarks and penalties so that they can ensure that the benefits outweigh the costs.

Some safeguards exist

Lenoir and Caldwell officials did not include such provisions. Without them, Google could invest a lot, get the tax breaks, and create far fewer jobs, Clower said.

The state included safeguards. To get an exemption on sales taxes, Google must invest at least $250 million within five years and use the equipment and electricity. If it doesn't, it forfeits the benefit and must repay all taxes with interest.

Google gets the $4.8 million grant approved by the Commerce Department only if it meets interim steps. It must create at least 168 jobs by 2011 with average annual salaries of about $43,500 and invest $480 million.

Caldwell County officials have said that the Google project demands a broader view and that they wouldn't have signed on to a bad deal.

The community has struggled to rebound from thousands of layoffs as furniture, textile and other manufacturing plants closed.

County takes a chance

In recent years, it has consistently had one of the highest unemployment rates in the state. In December, the jobless rate, unadjusted for seasonal effects, was 8.4 percent compared with 4.7 percent statewide.

Google, those local officials contend, will help the community move into a new era. It's likely to draw higher-paid workers -- the average salary of Google employees is expected to be $48,000 a year -- new retailers and other employers that will add to the tax base.

While county and city leaders waived 100 percent of Google's business property taxes, they'll still get 20 percent of its real estate taxes. Google is expected to become the biggest buyer of water from the city and it will pay other taxes, such as utility franchise fees.

"I'll talk about incentives all anybody wants to," Lenoir Mayor David Barlow told the Lenoir News-Topic last week. "Understand that the potential benefits could go from here on."