BEND, Ore. -- A sharp drop in home construction is squeezing a Bend city government that gets much of its funding from building permits and inspection fees.

Bend Chamber of Commerce web site

Downtown Bend at the Chamber of Commerce.

The Central Oregon city spent several years as one of the hottest real estate markets in the nation. But in November, the city issued permits for fewer than 70 new homes, apartments and condos. That's roughly a third of the number for the same period in 2005.

Cities and counties across America are suffering from the loss of property tax revenues due to the drop in home values. But the decline in revenues from lack of construction is also having an effect.

More: Construction down but remodeling strong in Bend

In December, the city gave layoff notices to six planners.

The fire department will leave two jobs vacant and the city won't be able to buy eleven new police cruisers as planned and will hold off on filling five positions.