If Jackson County continues to operate roads, public safety, libraries and other services at current levels, it will drain $40 million in rainy-day reserves in about four years.

If Jackson County continues to operate roads, public safety, libraries and other services at current levels, it will drain $40 million in rainy-day reserves in about four years.

That money could run out even faster if the current slowdown in construction continues, county officials say.

Jackson County's expenses, such as wages, benefits and utilities, have been increasing at a rate of 7.27 percent annually. Revenues, about half of which come from property taxes, increase at a rate of only 5.26 percent. The downturn in the housing market could diminish tax revenues further, officials said.

When construction slows, it also reduces fees the county collects and the number of permits processed by the Development Services Department.

"It's a double whammy," said County Administrator Danny Jordan.

The county annually collects about $17.5 million in fees and licenses that contribute to its $60 million general fund. That fund pays for the sheriff's department, the jail, the development services department and other county services.

Jackson County Clerk Kathy Beckett said her department also is noticing the impact of the construction crunch.

"We've been experiencing a slowdown for a number of months," she said.

At the beginning of the fiscal year, she estimated the clerk's office would receive recording fees of $1.7 million, but she has since revised that down to $1.6 million.

Beckett said her office has added additional services that have increased revenues, including the issuance of passports starting in 2006. Additional revenue also could come from a new domestic partnership law if it ever clears challenges in the courts.

Without the cost-saving measures of the past year — including outsourcing libraries — the county's future financial situation could be looking far worse, Jordan said.

Cost increases for running libraries have been decreased from 7 percent annually under the county to 3.75 percent under a private contractor.

Reductions in county staff and other cutbacks also have helped improve the financial picture, Jordan said. In the roads department, for example, staffing levels were cut by 16 employees last fiscal year through attrition, and grading, graveling and road sweeping are being cut by 20 to 25 percent this year. Jobs also have been left unfilled in the development services department because there is less work to do now as a result of the construction slowdown.

As the county begins grappling with its general fund budget for next year, Jordan is taking a look at what lies ahead.

He and other officials are developing a five-year strategy for coping with declining revenues. Among options for saving money is outsourcing other services, he said.

Commissioner C.W. Smith said the strategic plan will anticipate worst-case and best-case scenarios.

He said this is the first time in his memory that the county has looked at its budget situation for the long term.

In a worst-case scenario, he said, the economy could drop into a prolonged recession that will hurt revenues further.

"The sooner we make reductions knowing what the worst-case scenarios are, the better off we will be for a long time," he said.

Smith said the county will not be "squeamish" when it comes to making tough decisions that could upset some residents. He vowed to involve the public as much as possible in the process before any decisions are made.

A 12-member task force for Jackson County last year proposed various taxes that, if passed, would adequately fund county services such as the roads department, the sheriff's department, mental health, the county jail and libraries.

Some of the options suggested included increased gas taxes and a public safety surcharge of $3 annually for residential properties, $5 for commercial and $10 for industrial. Library supporters are considering asking voters for a levy to keep branches open beyond the three years of funding promised by the county.

While the county wrestles with difficult decisions in the next few years, it could get some help if the federal government renews the Secure Rural Schools and Community Self Determination Act, which helps timber dependent counties.

The county received a one-time extension of $23 million last year that helped pay to reopen libraries.

Smith said he's committed to pressuring lawmakers into supporting some kind of common-sense thinning effort in local forests to prevent wildfires and also to pump additional money into the local economy.

"If we ever get some degree of sanity in our forest policy and get a reasonable return from managing our forests, we can have some relief for certain county services," he said.

Reach reporter Damian Mann at 776-4476 or dmann@mailtribune.com.