As California extends and expands its film tax credit program to restore its allure with producers, North Carolina could become the latest U.S. state to exit the North American tax credit arms race.

But what will be the impact on Hollywood North as North America’s film tax credit arms race heats up?

“There will be a patriotic pressure form the Americans to stay in the United States,” Paul Bronfman, CEO and chairman of Comweb Group, told Playback Daily on Wednesday.

“It will make it tougher for any jurisdiction outside of Los Angeles to compete as they did before,” he added.

California on Wednesday unveiled a deal to renew its tax credit program that will see the state handing out $330 million a year over the next five years to keep pace with tax breaks luring Hollywood production to Canada and elsewhere.

California governor Jerry Brown announced the deal on his Twitter account: “Proud to announce a deal with Dem and Rep leg. leaders to expand, extend & improve CA’s TV & film tax credit program.”

The $330 million pot is up sharply from the $100 million in annual funding distributed (via lottery) by the current film tax credit regime in the U.S. state, but down from an initial $400 million in annual funding first proposed to secure bill passage.

A recent annual progress report unveiled by the California Film Commission found the state’s modest tax credit program was not stopping Canada and other rival locales continue from eroding Hollywood’s traditional production base.

Meanwhile in North Carolina, that U.S. state proposes replacing a 25% refundable tax credit with a $10 million grant program, starting Jan. 1, 2015.

As they found out in Saskatchewan, losing a refundable tax credit generally signals a rush to the exits by local film and TV producers.

“If the legislature fails to act, the program will expire at the end of 2014 — and many productions will pack up and move to other film-friendly states like Georgia and Louisiana, taking the state’s thousands of film jobs with them,” the North Carolina Production Alliance warned in a statement this week as it called for the current program to be retained.

Despite the tax credit moves stateside, WFW’s Bronfman said Canada will continue drawing Hollywood production across the border. But California tripling the amount allocated for its film tax credit program will take a bite out of Toronto and Vancouver, and especially New York City, he warned.

“We’re well positioned to compete with a new California tax credit, but when push comes to shove, most actors would rather sleep at home,” Bronfman said. “This will give them employers more incentives to keep the productions at home,” he added.

On the talent side, Stephen Waddell, ACTRA national executive director, was optimistic, saying Canada is well ahead of California in an increasingly crowded film tax credit business.

“We in Canada have always experienced this form of competition. Canada led the way with tax credits, and have been the beneficiary of the tax credits,” he said.

Waddell said Canada will continue to market itself to Hollywood for its tax credit certainty, and pointed to Canada’s reputation for quality talent, crews and production infrastructure as ongoing positives.

“There’s something about Canada and the tax credits: they are predictable, there’s stability in our credits, there’s an understanding that they will continue.”

That’s in contract to rival U.S. locales which, unlike California, have shrunk or scrapped their own film tax credits amid budgetary crunches for their state economies.

Here in Canada, Quebec recently slightly trimmed its film tax credits, but the impact on local Hollywood production activity has yet to be seen.

Updated: Aug. 28