The current Wall Street meltdown and $700-million bank bailout by Washington could either help Hollywood film and TV projects find their way to Canada, or hinder them.

It depends on whether you’re shooting in New York City or Los Angeles.

The economic crisis on Wall Street could be good news for Canada, as New York state is considering shrinking its tax incentives for local film and TV producers to deal with expected revenue shortfalls.

New York Governor David Paterson on Oct. 3 told a press conference his state faces an ‘economic bloodbath,’ and urged the State Legislature to meet in a special session to tackle a growing deficit.

New York has drawn a slew of production from Hollywood, including ABC’s Ugly Betty, by tripling its tax break for all below-the-line production costs spent in the Empire State from 10% to 30%. New York City also introduced a 5% bonus to halt siphoning of work to neighboring states or Canada.

But with New York getting hammered by projected lost jobs and revenue from the economic crisis on Wall Street, the talk is local politicians will look to scale back generous incentives for Hollywood to plug budget holes during a slowing economy.

Under the current incentives regime to run to 2013, the state will hand out $65 million in tax credits to local producers in 2008, $75 million in 2009, $85 million in 2010, $90 million in 2011 and 2012, and $110 million in 2013.

It is understood that no decisions will be made until after the Nov. 4 U.S. election, but the proposal on the table is to scale back New York state’s tax liability for local movie and TV shoots in the coming years to divert funds to more needy sectors of the economy.

Whether Canada – and specifically Ontario and Quebec to the north – will benefit from New York state’s travails is uncertain because the earlier Writers Guild of America strike, and now the prospect of labor action by the Screen Actors Guild, has upended Hollywood’s production schedules.

Now the bad news for Canada. The $700-billion bailout of Wall Street banks – approved by the U.S. Congress on Oct. 3 and signed into law that afternoon by President Bush – contains some unexpected tax breaks for Hollywood producers who keep their movie and TV shoots at home, and don’t take them abroad to Canada or elsewhere.

Hollywood producers that keep projects with budgets of less than $15 million in the U.S. – which excludes blockbuster studio shoots – are expected to receive $470 million in tax breaks over 10 years.

U.S. presidential candidate Barack Obama has long played the anti-outsourcing card during his run for the White House by urging no more tax breaks for companies that ship jobs overseas and more for those that invest in the U.S. market.

The surprise is it was assumed that Obama was talking more about General Motors and Microsoft, and moving jobs to China and India, than about Hollywood and its foreign location shoots in Canada or elsewhere abroad.