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End of timber payments in 2011 causes concern

If the economy starts recovering in 2010, rural counties in Oregon will have to brace for another wave of economic problems once a federal payments program begins winding down.

A task force appointed by Gov. Ted Kulongoski released a report this week that advocates creating a council to prepare counties for severe financial downturns that could begin in 2011.

Kulongoski is asking the Legislature to push forward Senate Bill 78, which would create a council charged with devising a fiscal plan for financially ailing counties.

Another proposed piece of legislation, Senate Bill 77, would devise a scenario for counties that can no longer provide adequate public safety services. In some cases, the state might have to step in.

"We can't lose sight of the fact this financial crisis is going to hit in two years," said Jillian Schoene, spokeswoman for Kulongoski.

The Governor's Task Force on Federal Forest Payments and County Services issued a draft report last year warning of dire consequences if the federal government didn't renew a timber program that compensates counties for losses in logging revenues. Many of the findings in the draft report are similar to the final report, said Schoene.

The federal government renewed the payments program but reduced the compensation each year until 2012. By 2011, Schoene said, many counties will have already been hard hid by a reduction of more than half the timber payments revenue.

"We averted a financial crisis for at least two more years," she said.

Jackson County, which is in the top 10 counties in the state to receive the support, would start losing 34 percent of its general fund revenue source if the federal county payments program is not continued.

Jackson County Commissioner Dave Gilmour said the county has taken steps that have put it in fairly good financial shape.

The county hopes the state receives enough money from the federal economic stimulus package that will trickle down to the local level to continue to fund health-service programs such as alcohol and drug treatment.

"If it doesn't happen, that wouldn't be good," he said.

The programs could be cut because the state's revenues are declining.

Jackson County already has made reductions in its Planning Department, the clerk's office and in the roads department because of declines in revenue, he said.

The task force urged action to offset the losses without resorting to another plea for federal support.

The U.S. government could increase compensation for logging on federal lands and management of forests, which could lead to more logging. These measures would only partially address the financial problems that will hit counties, the task force report concluded.