Will the Illinois movie tax credit lure Hollywood into the heartland?

While Chicago has long been used as a stand-in for fictional and real-life settings, the suburbs have also become a destination for film and television companies looking for a specific look.

“Illinois can be everything but desert,” said Christine Dudley, executive director of the Illinois Production Alliance. “There is architecture, a lake, suburbs, forest preserves and even farmland. And all within a few minutes of each other.

But what makes the suburbs — and other parts of the state — look so attractive is the deal producers get to film in Illinois.

The HBO movie “Somebody Somewhere,” starring Bridget Everett and Jeff Heller, was filmed in the suburbs, particularly in Warrenville and Lockport.
Courtesy of HBO

The state’s film production tax credit allows qualifying productions to receive a 30% transferable tax credit on most production costs and certain salaries. Producers can also receive an additional 15% for hiring workers who live in “economically disadvantaged areas.” In turn, these productions generate employment opportunities and attract businesses from outside the region.

According to a new report commissioned by The Dudley Group, the state’s movie incentive is the biggest box office draw for Hollywood. A survey of producers included in the report indicates that more than 90% of productions filmed in Illinois would not have happened without the incentive.

“All production companies are looking for where the incentive is, and that’s No. 1,” said Peter Hawley, director of the Illinois Film Office. “And we have a very strong one.”

A lot of modern products take advantage of this.

Producers of the TV series “Fargo” used Elgin and other suburban areas as a stand-in for Kansas City a few years ago. Acclaimed director David Fincher transformed downtown St. Charles into upstate New York for his latest Netflix film, “The Killer.” Parts of Warrenville and Lockport are used as stand-ins for Manhattan, Kansas, in the HBO series “Somebody, Somewhere.”

Hawley notes that in 2022, nearly $700 million in film, television and commercial production expenses qualified for the incentive program, receiving $207 million in tax credits.

“One of the first things we ask on the forms is why Illinois?” Hawley said. “It’s always because of the tax break, because something that would have cost you $1 million now costs you $700,000.”

Illinois is one of 37 states that offer some type of production incentive, according to the report. However, some critics and researchers question the value of these tax incentives, not just in Illinois, but nationally.

“There are common challenges in measuring the economic values ​​of this type of incentive,” said Austin Berg, vice president of marketing at the Illinois Policy Institute, a conservative think tank that analyzes and tracks government finances. “What would be the economic advantage if you reduced the tax bill of all businesses by $200 million instead of just one industry?”

A 2022 National Conference of State Legislatures report showed that some states are losing money in film production incentive programs.

Analyzes of such programs in California, Pennsylvania, and Virginia indicated that those states did not get the results they expected.

“We found that the costs exceeded the benefits,” the California Legislative Analyst’s Office wrote. “We concluded that about a third of the projects that received credit probably would have been located here whether they had received support or not.”

But it’s not just about what producers get, advocates of the incentive program say. Dudley said there is a greater benefit to the state’s economy than just the costs of film production.

According to the new report, for every dollar that Illinois attributes to production, that production is responsible for $6.81 that returns to the state’s economy either “directly, indirectly or induced” through production.

“The Bear,” about a chef (Jeremy Allen White, left) who returns to Chicago to run his brother’s sandwich shop, was filmed in the city and showcases its restaurant scene.
Image courtesy of FX

Induced revenue includes any type of tourism revenue generated by the popularity of a film or television show. “The Bear” on Hulu is a huge hit in Chicago and has sparked the city’s culinary tourism business.

There are also many bus tours that offer trips around Chicago and the suburbs of popular filming locations.

However, NCSL researchers say it is “difficult to determine the extent to which state tourism has benefited from film development.”

However, industry officials believe all the benefits are important.

“Illinois’ return on investment is one of the highest in the country, but it’s hard to compare because not all incentive programs are apples-to-apples,” Dudley said.

In fact, Illinois’ model is different from most other states.

“Because it’s a tax break and not a rebate, the money stays in Illinois,” Hawley said. “We don’t just hand you a bag of money after the shoot is over.”

The credit is also transferable, so it can be sold to other business entities that owe state taxes, Hawley noted.

While the Illinois Production Alliance report makes suggestions that could improve the situation for producers, such as eliminating the creditable earnings cap and removing the program’s 2032 expiration requirement, Hawley believes the state is still in a good position to compete for a new film. Future television and commercial projects.

“We are expanding,” he said. “We have a workforce training program that we started after it was postponed due to the coronavirus. We are in for the long haul.”