CHICAGO—Though key details were still being worked out at press time, the current draft of an anti-runaway proposal supported by Gov. Rod R. Blagojevich (D-Ill.) offers a tax credit to eligible shoots in Illinois spanning both longform and shortform fare. If it ultimately comes to fruition, the tax credit would, according to Blagojevich’s office, amount to 25 percent of the wages paid to Illinois residents who work on a qualifying feature, TV program, commercial or sponsored content project lensed in the state.
Plans call for Rep. Angelo "Skip" Saviano (R-77th District) to introduce the film incentive bill in the state legislature this month. A lobbying campaign for the measure’s passage is already underway. Much of the initial public attention has centered on the feature/TV side of the incentive, whereby productions of content that’s 30 minutes or longer would each have to spend at least $100,000 on Illinois labor in order to qualify for the tax credit. But also included in the working draft is a provision by which projects for advertising purposes, including commercials and branded entertainment, will be eligible for the tax credit as long as each has a minimum of $50,000 in wages being paid to Illinois residents.
As currently worded, the legislative initiative, if passed, would take effect on Jan. 1, 2004. However, it’s conceivable that both state houses could pass the bill and vote to enact it sooner, pending the governor’s signature.
Prospects for passage of the bill are mixed. Preliminary indications are that the proposal is gaining bipartisan support. At the same time, the state’s overall deficit for fiscal year ’03-’04 (which begins in July) could pose an obstacle to anti-runaway reform. In some circles, it’s estimated that the State of Illinois is facing a $5 billion shortfall, with cutbacks hitting different sectors and services. Gaining the necessary approvals for tax cut-related filming incentives in this climate could prove challenging.
Bob Hudgins, assistant director of the Illinois Film Office, has been working with legislators and industry officials on the filming incentive package. He had been serving as the Illinois Film Office’s acting director up until a couple of months ago, when gubernatorial appointee Brenda Sexton became the full-time director. Hudgins said that the bill reflects the desire of Gov. Blagojevich and many other legislators to invest in state industry. "Illinois is bleeding jobs right now," related Hudgins. "If we don’t do something to circumvent this loss of jobs, the work will just go away." That’s why, he said, despite a state deficit of some $5 billion, the legislative measure is picking up positive momentum and support.
Mark Egmon, president of the Midwest chapter of the Association of Independent Commercial Producers (AICP), noted that language of the tax incentive proposal is still being ironed out. For example, whether a per-project cap will be placed on the amount of wages eligible for the tax credit is yet to be determined. Also being discussed is how to most equitably and efficiently transfer the monetary savings realized by the tax credit to the production company, agency and/or advertiser when the qualifying project is a commercial or a piece of branded entertainment.
"This tax incentive proposal is a very progressive step, as is the fact that commercials and branded entertainment have been included," related Egmon. "The governor and the Illinois Department of Commerce and Economic Opportunity [DCEO] have expressed a strong interest in the health of the advertising sector in Illinois."
Indeed, commercials are a major part of the Illinois industry landscape. The governor’s office cited the fact that Chicago is home to the second largest ad agency base in North America, which is significant on both the spot and the emerging sponsored content fronts.
TASK FORCE
Gov. Blagojevich has additionally created the Illinois Visual Media Task Force to recommend steps the state can take to grow its entertainment/filmmaking infrastructure. The group will look into ways to keep local talent from moving out of the state, form partnerships to ensure that the region can continue to offer adequate sound stage services to meet the needs of major productions, and attract equipment suppliers and resources to the area. The latter is particularly relevant in light of last year’s move of a Panavision operation from Chicago to Dallas.
Jack Lavin, director of Illinois’ DCEO, has been named to chair the Visual Media Task Force. SHOOT was unable to connect with Lavin at press time. In the coming weeks, 14 other members from a cross-section of the industry will be appointed to serve on the Visual Media Task Force. They will report their findings and recommendations to Gov. Blagojevich by January.
It’s expected that several of those named to the task force will come from the Illinois Production Alliance (IPA), a group formed in ’02 to make the state more competitive for filming, content creation and development. IPA membership includes representatives from production and post companies, talent and craft unions; support and service companies; and industry-related governmental, educational and professional institutions. The spotmaking community is active in the IPA; in fact, one of the group’s founders is AICP Midwest chapter president Egmon, who is in the process of launching Outer Radius, a Chicago-based branded entertainment development and production company.
The IPA had a hand in helping to bring the current proposed tax incentive about. As earlier reported (SHOOT, 1/17, p.1), the IPA began forging strong connections in the government sector late last year, including with the transition team of then governor-elect Blagojevich.
"When people talk about runaway production, it’s as if the industry is dying and we’re trying to save it somehow," observed Egmon. "The fact is that visual media are growing globally. There are traditional forms—plus new kinds of content are emerging. States have to be competitive if they are going to tap into this growth industry. This incentive bill is one means toward that end. But the IPA is—and I’m sure the task force will be—exploring others."
For example, in that many aspects of the production industry are heavily based in technology, the IPA is also working with such groups as the Chicago Mayor’s Technology Council and the Illinois Coalition. The latter is a not-for-profit partnership of top state officials from the business, labor, government, education and research sectors dedicated to strengthening Illinois’ economy though science and leadership.
JOB BASE
In the big picture, nearly 34,000 people in Illinois work in 145 different film-related occupations, according to statistics released by the governor’s office. At a press conference held earlier this month, Gov. Blagojevich said that Illinois needs to take action in order to attract and retain more filming business. He noted that since ’01, there have been 18 features with stories set in Chicago that were actually filmed in Canada, due to cost savings attained via the favorable exchange rate and varied incentives. Twenty-four states have responded to runaway production by enacting their own incentives, but Illinois has not yet taken such steps to remain competitive.
According to the Illinois Film Office, motion picture and TV production accounted for nearly $125 million in ’99 —but those direct expenditures have steadily declined annually. Last year, this direct revenue dropped to a little more than $27.5 million.
The proposed incentive package comes as the state has brought on board a new film commissioner—Sexton. The changing of the guard came about with the election of Gov. Blagojevich, who appointed Sexton to the post. Hudgins held the position on an interim basis, filling the void created by the departure of long-time Illinois Film Office director Ron Ver Kuilen.
With a background as a film critic, and prior to that as a corporate executive who helped create thousands of jobs for Illinois residents, Sexton will work closely with assistant director Hudgins at the state film commission. The Illinois Film Office has several initiatives in the works while it lobbies actively for the passage of the lensing-related tax incentives. For example, the film commission is organizing an ambassadorship program that will encourage Illinois entertainment industry celebrities to raise the state’s profile at film festivals and other industry networking venues. The Illinois Film Office also plans to sponsor an annual event recognizing production achievements in the state.
