To combat the long-standing animation work flow to Canada and other locations, the Animation Association released a report Thursday urging California to improve its tax incentives.

Currently, California’s $330 million tax benefits limit live-action movies and TV shows. Two bills for SB 630 and AB 1138 will expand the program to $750 million and include animation for the first time.

The guild report prepared by CVL Economics believes that this is not enough.

“The state has now lagged behind the active policy strategies implemented by its global competitors for decades, and the erosion of in-state production has had a profound impact on its once-explosive pipeline of animation talent,” the report noted.

For example, the guild points to "Moana 2". The original movie was made in Burbank, but most of the sequel was made in Disney’s facilities in Vancouver. The union believes that when indirect impact is taken into account, decisions have led to 338 jobs in California and 479 more jobs.

Outsourcing has long been a source of debate between studios and guilds, and caused two strikes in 1979 and 1982. In negotiations last year, the guild proposed to cancel outsourcing clauses in the contract, but the film and television producers rejected the idea.

Jeanette Moreno King, president of the Animation Association, said that while animation has been working for a long time, the studio has also begun shipping many other tasks abroad, including storyboards and directors.

"Now they're sending out the entire work," she said. "They've expanded what they're sending. Some shows aren't going on here at all."

King has been involved in lobbying bills to expand tax incentives. She said that while the current bill includes animation, many children’s TV shows are not eligible because they do not meet the thresholds for budget and plot length.

"It's a win," she said, adding that it may be too late in the legislative process to do anything about the threshold.

The CVL report also noted that visual effects work has been poached in Canada for decades, with post-production centers established in Montreal and Vancouver, while other hubs have also taken root in London and Seoul. The guild believes these efforts are worth considering because they are at the forefront of technology.

“If California wants to maintain its leadership in entertainment, the state needs to be more than simply protecting
Old Production Model - It must invest in the future of the industry," the report said. "Rebuilding a strong animation talent group has nothing to do with nostalgia. This is about talent competitiveness. ”

The current California tax incentive program includes 5% live production bonuses, which account for at least 75% of California’s VFX budget. The report believes this is not competitive with VFX incentives in British Columbia and elsewhere. Some works use California tax benefits for major photography and then complete their VFX work elsewhere.

The report believes that VFX's work should be excluded from the state's $100 million cap for each project, which will provide a greater incentive to keep these work in the state.

The report also advocates animation work in an annual allocation of $750 million per year. For now, animated TV shows and movies will have to compete with live performances with “work ratios” scores to win credit distribution.

Councillors have been elaborating on the details of the legislation in negotiations with the Film Association and the Entertainment Union Alliance. In its current form, bills will increase the base amount of the state tax credit from 20% to 35% and potential bonuses for filming in economically frustrated areas or outside of Los Angeles.

So far, the alliance of independent commercial producers has also advocated including commercial production in state subsidies.