STEVE INSKEEP, host:

Anybody who thinks the government does not affect people's lives should speak carefully around residents of Southern Oregon right now. Counties in that region are in deep financial trouble. One is closing all its libraries. Another says it cannot afford a public health department. Others have to layoff highway crews, teachers and cops. And in all this they resemble rural counties in 40 other states. It's happening because of something the federal government did -a subsidy for counties with forestland has expired.

NPR's Jeff Brady reports.

JEFF BRADY: 20 years ago, it seemed like every other vehicle on Oregon highways was a logging truck. Back then, a lot of trees came from vast expanses of federal land in this state. Since it's public, it can't be taxed. To make up for that, the government shared money earned from timber sales with counties. For decades, this arrangement worked well. But environmental concerns have all but stopped logging in federal forests.

So in 2000, Congress created a safety net - payments based on past timber harvests in rural counties and 41 states would continue for six years. It was $400 million a year federal subsidy. Oregon received the most - $150 million.

The last checks were sent in December, and now the counties are facing huge budget holes.

Ms. APRIL THOMAS (Ashland-based Author): So thank you very much for coming, for carrying your signs and for being as passionate about your library as I am.

(Soundbite of applause)

BRADY: April Thomas with the local friends of the library group cried as she spoke to a bookish crowd in downtown Medford. Jackson County plans to shut down all 15 of its libraries on April 7th. All children carried signs touting storytelling programs, Joann Avery and Barbara Allman carried a sign that read: reference services.

Ms. JOANN AVERY: Well, I'm a retired librarian, so I have a particular interest in libraries providing reference services to people.

Ms. BARBARA ALLMAN: And I'm a writer and I need reference services and it's very important to my, you know, livelihood.

BRADY: At a public hearing, commissioners agreed: libraries are important, but so is law enforcement and human services. And there's not even enough money to fully pay for those. Jackson County Administrator Danny Jordan told the crowd there are no good options.

Mr. DANNY JORDAN (Administrator, Jackson County): We could cut everything else that the county does in terms of spending discretionary money, and it's roughly $2 million. So we could cut everything the county does besides public safety, and we would still be in a situation of having to close the libraries.

BRADY: In neighboring Josephine County, the sheriff says without federal safety-net money, he can afford only one patrol car for an area the size of Rhode Island.

Just north in Douglas County, the road department and schools also will suffer. But you won't find Commissioner Doug Robertson sitting at his desk slashing budgets.

(Soundbite of footsteps)

BRADY: Instead, he's 2,000 miles away walking the halls of Capitol Hill office buildings, lobbying members of Congress. He says no one thought the situation would get this bad. He assumed Republicans would take care of these rural red counties in the waning hours of the last session.

Mr. DOUG ROBERTSON (Commissioner, Douglas County): They did not. Then we thought, well, they'll certainly pick it up in the lame duck session. They did not. And we thought, well, everybody is beginning to understand the urgency, so when they come back into session in January, they'll have a plan. And they do not.

BRADY: That's because some members of Congress want to change the safety net program. They say Oregon is getting too much of the money, while counties there have some of the lowest local taxes in the country. Residents are accustomed to having services they don't pay for.

Senator Jeff Bingaman, a Democrat from New Mexico, says there's another issue.

Senator JEFF BINGAMAN (Democrat, New Mexico): These payments were intended as transition payments for these communities. They've been in transition now for 15 years. And I think the Congress has never been intending to just have a permanent federal subsidy.

BRADY: Democratic Representative Peter DeFazio of Oregon, says Congress owes this counties some sort of compensation.

Representative PETER DEFAZIO (Democrat, Oregon): It's the thing I've wake up thinking about and the thing I go to bed thinking about. And sometimes I stay up night because I can't sleep thinking about it.

BRADY: In counties in southern Oregon will soon send out layoff notices. Meanwhile, DeFazio and other members of the Oregon delegation hope to pass an emergency one-year extension of the safety net subsidy and debate a permanent solution later.

Jeff Brady, NPR News, Medford, Oregon.

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