Film Tax Credit Expires in State Budget Impasse

BY Ed M. Koziarski

The state legislature failed to extend the Illinois Film Tax Credit by the time the fall veto session ended in mid-December. That means the credit expired Dec. 31, and the state will take no new applications until the legislature passes a new tax credit bill, which advocates hope will be this month.

Until a new credit is passed, Illinois loses its single most effective tool in attracting film, TV and commercial producers to shoot here. Any appearance of uncertainty in the tax credit could threaten Illinois’ ability to attract productions for the winter and spring, as studios greenlight their final projects before the SAG and Directors’ Guild contracts expire in June. (In early December, Universal Pictures did approve Chicago principal photography for Michael Mann’s Public Enemies, starring Johnny Depp as John Dillinger.)

Advocates attribute this year’s surge in local film production (see story page 1) to the benefits of the tax credit, which was expanded last year.

In the meantime, the Illinois Film Office continues to honor existing applications, and was accepting new applications until the end of the year.

“Anybody who applied before Dec. 31 has two years to complete the project and be eligible for the credit,” said Eileen Willenborg, executive director of AFTRA/SAG Chicago and vice president of the Illinois Production Alliance, a leading advocate for the tax credit.

There were bills in the state house and senate to extend the tax credit to Dec. 31, 2008. Willenborg said the credit extension has support from Gov. Rod Blagojevich and the party leadership in both legislative houses. “There’s no contention with our bill, but we’re hostage to the budget process,” Willenborg said. “We’re a small blip in the debate that includes the CTA and infrastructure.”

As the legislature met in special session to try to resolve the budget impasse, Illinois Film Commissioner Betsy Steinberg was in Springfield pushing to extend the tax credit.

Like any bill during special session, the tax credit extension required a 60 percent super-majority to pass. With the new legislative session that began last week, the tax credit will face smoother sailing, requiring only a simple majority for passage.

First passed in 2004, the credit was initially limited to 25 percent of local labor expenditures. In May 2006 the legislature expanded the credit to cover 20 percent of all qualifying in-state expenditures, a much higher value for most shoots. Illinois’ expanded tax credit was one of the most aggressive in the nation when it was passed, but many states, including Wisconsin, have since established their own tax incentives that are at least as aggressive as Illinois’.

The top of the IPA’s agenda is getting a multi-year extension of the tax credit, which would be much more effective in attracting long-term production. TV series, the biggest potential engine for the local industry, particularly look for multi-year incentives when choosing locations for their open-ended shooting periods. The IPA has repeatedly proposed a multi-year extension, only to have it scaled back to a single-year extension.