State officials say filming has been an economic boon, with production companies spending an estimated $2.8 billion on Illinois goods, services and wages for actors and other workers over the past seven years.

That’s come at a price. Taxpayers stand to lose $204 million because of tax breaks the state gave to 931 movies, TV shows and commercials between July 1, 2008, and Dec. 11, 2014, under the Illinois Film Production Services Tax Credit Program, records show.

Many filmmakers have cashed in by selling those tax credits to businesses including Meijer, Kohl’s and Apple, as well as to a handful of individuals, among them Oprah Winfrey, who get to deduct the credits from corporate and personal income taxes they pay the state.

The state allows five years to claim the credits on tax returns. So far, 57 percent of the tax breaks — totaling $117 million — have been claimed. That includes $44 million in lost tax revenue so far from the program in the 2013-14 budget year — more than double the previous two years combined, according to the Illinois comptroller’s office.

And the Illinois Film Office has yet to approve hundreds of applications from productions that have completed filming and in some cases have already aired, records show. That’s because producers have two years to submit an audit and final paperwork showing how much money they spent in Illinois.

“Chicago Fire,” for instance, has gotten a tax credit only for its pilot episode — $1.6 million. The state has yet to approve credits for other episodes of the show, which just finished its third season.

Director Spike Lee is currently filming a movie about violence in Chicago tentatively titled “Chiraq” — a title that has enraged Mayor Rahm Emanuel and other elected officials including Ald. Will Burns (4th), who wants the state to withhold a $3 million tax credit unless Lee changes the name of the movie.

“The state has not taken a position on the working title of the movie,” says Lyndsey Walters, a spokeswoman for the Illinois Department of Commerce and Economic Opportunity, which includes the state film office.

Under state law, Lee’s production company won’t even be eligible for the tax credit until after production is complete and state officials see how much money it spent here.

The film tax credit program — set to expire in 2021 unless it’s renewed by lawmakers — has been caught up in the political battle between Republican Gov. Bruce Rauner and Democratic legislative leaders over the state’s financial crisis. Rauner has ordered the film office “to defer application approvals for film tax credits” as a cost-cutting measure, raising concerns that big productions — many which film at Cinespace Chicago Film Studios in North Lawndale — might move to other states.

Supporters of the program say it creates jobs and boosts spending in Illinois.

“Cinespace supports over 5,000 jobs and has spurred $1.2 billion in spending in Illinois since 2011,” studio spokesman Eric Herman says. “Without the film tax credit, the jobs, the spending and the tax revenue that flows from both would disappear. Hollywood studios can film anywhere in the world. The reason they’re filming so many movies and shows here is the tax credit.”


Illinois is one of 39 states that offer tax breaks to filmmakers, who often are drawn to shoot in states that offer them the biggest savings — incentives that pit states against each other in a competition they hope will pay off in increased spending on goods and services.

It’s a heated competition. California has begun offering 20 percent tax breaks to TV shows that relocate from other states. Those shows include FX Networks’ popular “American Horror Story,” whose producers recently decided to move back to California after filming in Louisiana, Variety magazine has reported.

Illinois and other states also face competition from Canada and other countries, which offer tax incentives of their own.

“The result of this competition . . . becomes a transfer of revenues from the states in aggregate to the film industry,” according to an analysis of the Illinois program done five years ago by then-state comptroller Dan Hynes.

“On the one hand, film production brings . . . jobs, and there is the prestige and attention drawn when a major film production and the associated celebrities come to an area. On the other hand, the jobs attracted are much more similar to temporary construction jobs than the permanent, fixed-location jobs most employment-attraction efforts seek.”

Illinois’ program was created under a 2008 state law signed by Gov. Rod Blagojevich and later continued by Gov. Pat Quinn. It offers a 30 percent tax credit to TV and movie producers who spend at least $100,000 on Illinois goods and services and to TV commercial producers who spend at least $50,000.


Producers also can get the 30 percent credit on wages of up to $100,000 for each worker — including actors — who has an Illinois drivers’ license or state ID before filming starts.

The state offers an additional 15 percent credit to producers who hire Illinois residents from communities with unemployment above 13.8 percent.

TV shows and movies have to apply for the credits five days before they begin shooting. Commercial producers have to do so 24 hours in advance. Their applications must include estimates of how much money they’ll spend in Illinois.

Producers then have two years after they spend their last dollar to submit an audit showing how much they spent in Illinois before the state will issue them tax credits. Many production companies are based out of state and don’t pay income tax in Illinois, so they often sell the credits to businesses and individuals that do pay taxes here.

For instance, for producing the 2010 season of “Judge Mathis” in Chicago, AND Syndicated Productions Inc., of California, got nearly $1.9 million in tax credits on Sept. 5, 2012, records show. Three months later, AND Syndicated sold the credits to Bank of America, which must use them within five years.

The Illinois Film Office provides producers with a list of 23 brokers to help them sell their tax credits, which need to be transferred within one year of when they are issued and must be spent within five years of that date, regardless of whether they’re sold.