SALEM – Helping cash-strapped rural counties reliant on timber payments stay afloat is a high priority, the governor said Tuesday, noting that both long- and short-term solutions are needed.

Some solutions, however, are far less likely than others.

“There is no magic pot of money here at the state to bail them out,” Gov. John Kitzhaber said to a room full of reporters and editors from around the state.

 On the other hand, he said, there are opportunities to look at “the economy of scales” and attempt to combine some county services, including jail space and law enforcement duties. To this end, he said, his office is looking at what laws need to be changed to give counties more flexibility.

Kitzhaber also talked about giving counties a chance to dip into funds that are earmarked for other purposes, but said that move would be a “two-edged sword.” For example, Curry County, in southwestern Oregon, is expected to be broke in 2013, but has a road department fund of $33 million it can’t tap into.

“Any step in that direction has to be part of a longer-term strategy,” the governor said.

 Counties are also looking at raising property taxes. Some officials, meanwhile, have discussed the possibility of allowing particularly hard-hit counties to dissolve and merge with neighboring counties. But the governor noted that successful counties have little incentive to merge with neighbors in trouble.

Timber payments were created to help counties with large amounts of federal forestland within their borders. The federal government doesn’t pay taxes on its land, so the subsidies help counties pay for road improvements, schools and emergency services. The act that authorized the payments expired at midnight on Sept. 30.

The long-term solution, the governor said, is to look at a different way to manage some portions of the federal forests. He supports legislation proposed by Democrats Peter DeFazio and Kurt Schrader, along with Republican Greg Walden, that would increase logging on federal forests while protecting certain parts for conservation.

But  he acknowledged that getting the legislation passed could be difficult.

“I’m still hopeful,” Kitzhaber said. “I’m not optimistic. We’re in an election year, and the politics back there are very clouded.”

Last week, Curry County Commissioner George Rhodes met with Oregon Department of Administrative Services Director Michael J. Jordan in Salem.

“The state will look at consolidation as much as possible in regional ways,” Rhodes said following that meeting.

He said the state would see if that could save money over counties acting as separate entities.

“There was some thought of assessment and taxation,” Rhodes said. “Each county could pay a part of that cost.”

Rhodes said that courts could work on a regional basis.

“I believe that will be a focus how we can accomodate regional courts,” Rhodes said.

But he said that would require legislation.

Rhodes said much of the discussion with Jordan was informational.

“There is a sense of urgency of policy in Salem,” he said.

“We need to continue to make the governor’s office aware of our situation,” Rhodes said