MEDFORD, Ore. -- If Jackson County keeps providing services at present levels, its $40 million rainy day reserves could dry up in about four years, faster if the current slowdown in construction continues, county officials say.

They say expenses such as wages, benefits and utilities rise at about 7.27 percent annually. Revenues, about half of which come from property taxes, increase at a rate of 5.26 percent.

County officials said the construction slowdown reduces permit fee revenue.

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

Jackson County isn't alone.

The building slump is squeezing Bend, which also depends heavily on permit fees.

In November, Bend, until recently one of the nation's hottest housing markets, issued permits for fewer than 70 new homes, apartments and condos, roughly a third of the number for the same period in 2005. City officials estimate that revenue for the city planning office could drop by 60 percent this fiscal year.

In December, the city gave layoff notices to six planners. The Bend fire department will leave two jobs vacant. The police won't buy 11 new cruisers as planned and will delay filling five positions.

In Jackson County, about $17.5 million of its $60 million general fund comes from license fees.

Jackson County Clerk Kathy Beckett said her department also feels 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 has revised that to $1.6 million.

Beckett said her office has added services to boost revenue, including the issuance of passports. More could come from a new domestic partnership law if it ever becomes final, she said.

Without recent cost-saving measures the outlook could be worse, Jordan said.

Cost increases for running libraries have been cut in half by using a private contractor.

Last fiscal year, the roads department cut 16 jobs through attrition. Grading, graveling and road sweeping are being cut by 20 percent to 25 percent this year.

Other planning vacancies have been left unfilled because there is less work with the construction slowdown.

Jordan and other Jackson County officials are developing a five-year strategy for coping with declining revenues, including outsourcing services, he said.

Commissioner C.W. Smith said a worst-case scenario could mean a recession that will reduce 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" with tough decisions that could upset some residents.

A 12-member county task force last year proposed various taxes to fund county services such as the roads department, the sheriff's department, mental health, the county jail and libraries.

Suggestions included increased gas taxes and public safety surcharges for industrial and residential property.

Library supporters may ask voters for a levy to keep branches open beyond the three years promised by the county.

More help could come if the federal government renews county timber payments meant to replace revenue lost by cutbacks in logging on federal land. The payments program is on a one-year extension that expires at the end of June. The county got $23 million last year.