Despite a budget deficit of $5 billion this coming fiscal year, the State of Illinois still mustered enough support to push through a wage tax credit designed to keep and attract filming. The Film Production Services Tax Credit Act, which takes effect Jan. 1, represents a major victory for the anti-runaway movement.
"It’s amazing in and of itself that we were able to pass a wage tax credit in this current economic climate," observed Jack Lavin, director of Illinois’ Department of Commerce and Economic Development (DCEO), who added that it was imperative that commercials and branded content be eligible for the incentive.
"Chicago is the second largest advertising agency market in the country," related Lavin. "Companies like Walgreens, Motorola, Kraft and McDonald’s are based here. Anheuser-Busch is in nearby St. Louis—and I’m told they spend [millions of dollars] filming in Canada. Commercials represent a key sector—they’re kind of the bread and butter of the filming business. … This work is vital to Illinois’ economy."
As earlier reported (6/13, p. 1), the 25 percent tax credit applies to the first $25,000 in wages per worker per production. Workers must be Illinois residents hired for a qualifying feature, TV program, commercial or sponsored content piece lensed in the state. Projects for advertising purposes (29 minutes or less), including spots and branded entertainment, are eligible for the tax credit as long as each has a minimum of $50,000 in wages being paid to Illinois residents.
However, while the passage of the legislation was a pivotal accomplishment, in several key respects the work has just begun for Illinois. In the coming months, the DCEO will be involved in the rule making process to iron out key details of the tax credit. For instance, the tax credit must be earned by a company certified to do business in Illinois. The DCEO, with input from the industry, will define what constitutes such a certified company. Even if the production house on a job is from out of state, the prerequisite might be satisfied if the project is for an Illinois client or ad agency. Lavin noted that spot shops might be allowed to take a page from the moviemakers’ script, in which separate in-state companies are often set up for the production of feature films.
Additionally, pointed out Lavin, it’s essential that Illinois market this incentive. The legislature passed the tax credit only for calendar year ’04. Thus it behooves Illinois to make sure the incentive is utilized so that the full economic benefit can be realized to the state, its workforce and businesses. "That’s the only way to help ensure that the tax credit will continue past next year," said Lavin.
But the anti-runaway work for Illinois extends beyond the tax credit measure. "In 1996, we had 25,000 local people working in [feature, TV and commercial] production in Illinois," said Lavin. "Last year, that went down to a little over 8,000. As this has happened, the infrastructure has started to deteriorate. People left the state. Now we have to do whatever it takes to expand our infrastructure."
Towards that end, Gov. Rod R. Blagojevich (D-Ill.) has named Lavin to chair the Visual Media Task Force. Lavin will appoint 14 members from a cross-section of the industry to serve on the task force. They will report their findings and recommendations to Gov. Blagojevich by January.
"The primary movie studio in Chicago is up for sale [Chicago Studio City]," noted Lavin. "We have to look at ways we can save that facility and add others. … It’s all about us finding ways to improve and expand infrastructure."
