Animation Guild Seeks Enhanced California Subsidy to Combat Outsourcing

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In an effort to counterbalance the persistent outflow of animation work to countries like Canada and others, the Animation Union recently published a report advocating for California to enhance its tax reduction scheme.

Currently, California’s $330 million tax break is only applicable to live-action movies and television series. However, proposed bills SB 630 and AB 1138 aim to broaden this program up to a total of $750 million, with animation being included for the first time.

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The California tax incentive currently worth $330 million applies solely to live-action films and TV productions. Bills SB 630 and AB 1138 seek to extend this program to a maximum of $750 million, making room for animation as well.

The guild report, prepared by CVL Economics, argues that would not be enough.

The report indicates that the state is currently lagging significantly in progressive policies compared to international competitors, due to this, domestic production has diminished considerably. This decline has had a substantial effect on the previously bustling animation industry within the state.”

“According to the report, the state finds itself decades behind other nations in terms of aggressive policy initiatives, and the dwindling of homegrown production has left a deep mark on its once flourishing animation workforce.

For instance, the guild points to “Moana 2” as an example. Contrastingly, the original movie was fabricated in Burbank, however, a significant portion of the sequel was crafted at Disney’s Vancouver facility. The union contends that this move led to a loss of 338 jobs directly and an additional 479 jobs when considering indirect impacts.

As a devoted cinephile, I’ve witnessed the ongoing debate between studios and the guild over outsourcing, a topic that has ignited two strikes back in 1979 and 1982. Last year, during contract negotiations, the guild proposed scrapping the outsourcing clause entirely, but alas, the Alliance of Motion Picture and Television Producers chose to maintain the status quo instead.

Jeanette Moreno King, head of The Animation Guild, stated that for quite some time, animation jobs have been outsourced. However, she noted that recently, various tasks such as storyboarding and direction are also being shipped out of the studios to other countries.

She stated that now, they’re dispatching full-scale performances. They’ve broadened their scope of distribution. Some productions are entirely created off-site.

The monarch has been actively advocating for legislation aimed at broadening a tax break scheme. She stated that although the existing bills cover animation, numerous children’s television programs might not qualify due to falling short of the spending and episode duration requirements.

She mentioned that simply getting it through is already considered a victory,” she said, implying that it’s now likely past the point where adjustments to the thresholds can be made during the legislative process.

Additionally, it’s mentioned in the CVL report that visual effects work has been moved to Canada for numerous years, setting up production centers in Montreal and Vancouver, alongside other establishments in London and Seoul. The union maintains that these roles should be recognized due to their innovative use of technology.

The report suggests that to keep California at the forefront of entertainment, it’s not enough just to preserve traditional production methods. Instead, the state needs to focus on investing in the future of the industry. Revitalizing a strong pool of animation talent isn’t about longing for the past; it’s about ensuring a competitive edge in terms of talent.

In simpler terms, the current California tax break scheme offers a 5% extra reward to live-action projects that allocate at least 75% of their visual effects (VFX) budget within California. However, the report suggests that this incentive is not as attractive compared to VFX incentives offered in British Columbia and other regions. Certain productions leverage California’s tax break for main filming but complete their VFX work elsewhere.

The report proposes that Visual Effects (VFX) work should be exempted from the state’s $100 million per-project limit, thereby offering a significantly stronger incentive to retain these jobs within our state.

The report further supports setting aside a portion of the yearly $750 million budget specifically for animation projects. Currently, animated productions must fight for allocation credits based on a “jobs ratio” comparison with live-action shows.

Legislators are working out the specifics of the proposed law in talks with the Motion Picture Association and a group of entertainment unions. At present, the bills propose raising the initial percentage of the state tax credit from 20% to 35%, with an additional 5% incentive for filming in economically struggling regions or locations outside of Los Angeles.

The Independent Commercial Producers’ Alliance has, up until now, unsuccessfully proposed that commercial production be included in the state’s financial aid program.

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2025-05-02 02:48