Report: Animation firm got $49M in extreme tax credits

HARTFORD, Conn. (AP) — Blue Sky Studios, the business behind “Ice Age” and other animated movies, acquired $49 million extra in Connecticut point out tax credits than it should have, point out auditors stated in a report released Wednesday.

The Disney-owned organization, primarily based in Greenwich, Connecticut, is set to near in April and lay off its more than 450 personnel. Disney, which also owns animation powerhouses Walt Disney Animation Studios and Pixar Animation Studios, announced the closure in February, citing challenging financial problems amid the coronavirus pandemic.

Connecticut auditors claimed Blue Sky gained about $94.4 million in point out film generation tax credits from the 2017 via 2019 point out fiscal many years. Auditors claimed the business rather should have gained point out electronic animation tax credits, which are capped at a whole of $15 million for every calendar year for all organizations mixed. That resulted in the company acquiring $49.4 million much more than it really should have, auditors claimed.

“The way they did this does not surface to have adopted the spirt of the law,” state Auditor John Geragosian reported. “If the legislature had intended for them to be suitable for each tax credit rating programs, it would have been in the statutes.”

The economic development company issued the $15 million in most yearly tax credits less than the electronic animation software to Blue Sky in the course of the 2016 fiscal yr, then switched the credits for the corporation to the movie production program starting in the 2017 calendar year, the report explained.

Below the movie manufacturing credits method, firms that incur far more than $1 million in generation expenses are suitable for a credit score equal to 30% of such charges.

The Department of Financial and Group Development, or DECD, disagrees with the auditors’ findings, in accordance to an agency reaction involved in the auditors’ report. An company spokesperson would not comment outside of the published response Wednesday.

“A electronic animation production corporation is qualified for film generation tax credit history below … Connecticut basic statutes,” the reaction explained. “The organization makes movement photos, which is a statutorily certified medium.”

No one particular answered the cell phone at Blue Sky Studios on Wednesday afternoon.

Messages seeking remark had been still left for Disney officials and Democratic Gov. Ned Lamont’s office environment.

State Rep. Holly Cheeseman, rating member of the legislature’s Finance, Earnings and Bonding Committee, explained she was worried by the auditors’ report and would be asking DECD officers about the Blue Sky credits.

“If these are tax credits that shouldn’t have been used and we’re never ever likely to see that cash yet again and people are dollars that could have long gone to a further plan or one more organization, then obviously it worries and disturbs me,” stated Cheeseman, a Republican who represents East Lyme and Salem.

Blue Sky was established in 1987 by various workers of MAGI, the organization that manufactured scenes for the film “Tron.” 20th Century Fox purchased Blue Sky in the late 1990s, and it generated the “Ice Age” franchise of movies and other animated attributes including “Ferdinand,” “Rio” and “Robots.” Disney obtained 20th Century Fox in 2019.