ALBANY — In 2003, when state lawmakers ended years of deadlock and approved legislation giving financial incentives for developers to clean up and build on hundreds of acres of polluted industrial wastelands, Governor Pataki heralded the new law as a “historic” victory for the environment.

For the first time, New York would regulate the rehabilitation of mildly contaminated sites that aren’t polluted enough to qualify for Superfund clean-up money, called brownfields. The new program awarded developers with millions of dollars in refundable tax credits to pay for removing toxins from the land and spur redevelopment.

New data provided by the Spitzer administration, however, show that only a fraction of the money the state has spent on the Brownfield Cleanup Program has actually been used to clean up the polluted sites.

Of the $1 billion the state is required to give to developers for 54 sites over the next five years, $700 million is going toward paying for the construction of buildings and parking lots, according to state records. Only $300 million is being spent on toxin removal.

The hit on the state treasury is expected to grow substantially over the next few years. Behind the 54 sites are another 123 brownfield projects in the pipeline, which could cost the state an additional $2 billion.

Spitzer administration officials and other critics of the program are contending that what was billed as an environmental triumph has turned into an economic development boondoggle.

“I don’t think they had a clear idea of how this was going to play out,” the executive director of New Yorkers for Fiscal Fairness, Ron Deutsch, said. “It’s morphed over the years into a windfall for developers.”

The program, overseen by the Department of Environmental Conservation, which awards companies up to 22% of the building costs, has been especially lucrative to bigger developers.

For example, the state owes $110 million in tax credits to Westchester mega-developer Louis Cappelli, a long-time associate of Mr. Pataki whose company is building a mixed-use hotel complex in White Plains. Cappelli Enterprises is spending $500 million to build the complex and $1.5 million to remove toxins. It is eligible for $110 million in tax credits, or about 73 times the amount it spent on clean up.

“If the state had a $1 billion to spend on economic development, my guess is we would not spend it on these 54 sites,” Governor Spitzer’s environmental policy adviser, Judith Enck, said.

Mr. Spitzer is proposing legislation that would reimburse developers for the entire cost of removing toxins but place a $5 million cap on tax credits. Developers would be reimbursed above the soil remediation costs if they performed the highest level of cleanup, known as Track 1. The bill has met stiff resistance from Senate Republicans and isn’t likely to pass this session.

Pataki officials defend the program, saying it salvaged hundreds of acres of land and pointing out that the administration rejected numerous dubious requests for tax credits.

“We worked for years to establish an aggressive brownfield program for the state,” a spokesman for Mr. Pataki, David Catalfamo, said. “While we believe it’s working, there’s always room for improvement.”