Illinois Fights Runaway Production

November 1, 2003

Burned by runaway production to Canada and elsewhere in recent years, lawmakers in Illinois finally decided to fight fire with fire — or more accurately, with tax credits.

Last month Governor Rod Blagojevich went to the set of Barbershop 2, which was being shot on Chicago's South Side, to sign a new law aimed at reducing filming costs and luring production back to the state. The legislation, S.B. 785 The Illinois Film Production Services Tax Credit Act, was strongly backed by the Directors Guild of America which included strong support from DGA National Headquarters on the drafting and lobbying of the bill. The legislation provides a tax credit of 25 percent of the first $25,000 in salaries and wages paid to Illinois residents working on eligible productions in the state.

Critical to its passage was the Illinois Production Alliance (IPA), an industry advocacy group formed last October that includes representatives of small business, the state and city film offices and the industry's various labor arms, among them the DGA, the local chapters of the International Alliance of Theatrical Stage Employees (IATSE) and SAG-AFTRA, Steppenwolf Films, Columbia College Chicago, Harpo Productions and the Association of Independent Commercial Producers (AICP).

Daniel Moore, DGA's Midwest Executive Director, was elected chairman of the group's legislative committee and also serves as one of its five officers.

I think there's tremendous potential for the amount of production that can be brought into Illinois," Moore said. "The infrastructure is already here in terms of studio space, equipment, crews and acting talent; it's a matter now of being able to compete financially with other shooting locations."

In Illinois the runaway production trend has accelerated in recent years. According to the Illinois Film Office, what was once the nation's third largest film-production market throughout the 1990s, Illinois now ranks fifth, behind not only Los Angeles and New York but also Texas and Florida.

Last year production spending in Chicago was the lowest since 1977, as 18 films with Chicago story lines — including My Big Fat Greek Wedding, set in the city's Greek neighborhoods, and Chicago, the Oscar-winning musical — were made in Toronto. These two blockbusters were among 57 feature films with Chicago backdrops that have been shot in Canada since 1985, taking an estimated $1.9 billion and 17,000 jobs from the local economy, according to the city's film office.

When the legislation becomes effective on January 1, Illinois will join 2 other states with similar tax credits. Significantly, Illinois' legislation is the only state legislation to cover commercial production.

Contrary to previous anti-runaway production efforts, which looked for sympathy from elected officials, the IPA successfully convinced state lawmakers and the governor to give the industry the financial incentives it needs to compete by presenting the industry as a potent revenue raiser for the state. Moore also credits an alliance that is more organized, more united and better financed than earlier lobbying coalitions.

"Prior to the formation of the IPA, there were just individuals or different groups of people working independently, trying to get something done," he said. "The fact that we were able to bring together such a diverse group of people to speak with one voice really had a dramatic impact on our ability to get the attention of the government."

To be eligible for the state's new incentives, productions 30 minutes or longer must exceed $100,000 in Illinois labor expenditures; for productions less than 30 minutes, labor costs must exceed $50,000 paid to in-state residents. The law covers nearly all forms of visual media productions except for news, talk and game shows, sports programming, adult entertainment and corporate productions.

Moore called the new law a positive first step but acknowledged that a few unresolved issues remain, namely the question of out-of-state accessibility to the incentives.

UPM and IPA Board Member Tom Busch agrees that given the current economic climate it is a good first step. He added, "We have a number of hopes that the Department of Economic Opportunity which is administering the law will be able to improve the effectiveness of it."

"We're at a crucial and critical juncture in how that's going to come out," said Moore, who noted that the IPA is still pressing for changes to improve the legislation even as it enters the rule-making process. "We're cautiously optimistic and hopeful that the law will be amended to allow it to become an effective stimulant."

Until that happens, Moore said, "We've given the new film office director, Brenda Sexton, something to help promote Illinois."