WALLACE - Once dubbed one of the richest counties in the state, Shoshone County is now looking at how to scale back services as federal timber money evaporates. Its schools face the same issue.

"We are on full alert," said newly elected County Commissioner Mike Fitzgerald. "I came in this morning and sat down with all of the elected officials with the understanding that this is the beginning of a process."

The county and its three school districts are bracing for a major reduction in Secure Rural School funding, which combined totaled a little more than $2 million last year.

They are anticipating receiving less than 10 percent of that amount this year.

In Kellogg School District alone, the SRS program paid the district a little more than $397,000 last year. Art Krulitz, chairman of the board of trustees, said this year he only expects to see about $28,000.

"One of our real problems is that is what we used to fund our maintenance," he said, adding the school district has about $6 million in maintenance needs.

They have attempted to pass levies to cover the cost of those repairs, but have had no success.

"People just don't have the money to cover the costs," he said. "And we really don't have any way to deal with this without a levy."

The buildings in the Kellogg, Wallace and Mullan school districts are fairly old, he said, with many maintenance needs that are higher than average.

"Our newest school is Sunnyside Elementary and that is 15 years old," he said.

Krulitz said the district was already discussing the possible closure of one of its schools, and held six public workshops to decide which school makes sense.

The district, which boasted 2,200 students in 1984, now has 1,119 students.

The U.S. Forest Service has historically paid "forested counties" some form of compensation for taking the National Forest System off the tax rolls.

In Shoshone County, which is larger than several East Coast states, 78 percent is owned by the federal government or is otherwise tax exempt, according to Art's wife, former 20-year county commissioner Sherry Krulitz.

"That leaves only 22 percent of taxable land," she said. "But we still had to maintain over 450 miles of roads."

The U.S. Forest Service created the Twenty-Five Percent Fund Act in 1908 to compensate 746 "forested counties" nationwide for establishment of the National Forest.

That program paid counties 25 percent of the gross revenue derived from natural resource extraction within its borders.

"At one time we were one of the richest counties in the state," she said, explaining that both mining and timber generated enough money to pay for the entire operation of the county. "In the 20 years I served as county commissioner, we never had to levy taxes for roads."

The SRS program replaced the Twenty-Five Percent Act funding, when the Forest Service started to reduce timber harvests by 90 percent in the 1990s.

Last year the county received about $1.4 million in SRS funding, and projected $1.3 million for this year's budget. They won't receive anywhere near that amount.

"This is really concerning," said County Clerk Peggy White. "This is really catastrophic because you can only raise taxes so much."

White is anticipating about $130,000, but may see more depending on how the state splits a combined $2 million in federal payments statewide. Last year the state received $28.3 million.

Combine that with the fact that the county only has 12,650 residents, most of whom are over the age of 50 and retired, White said the situation becomes rather scary.

"I have been here for 13 years and this is definitely the scariest year," she said. "Who actually is going to finance all of the services?"

She said what personally bothers her is that on one hand the federal government is cutting their funding, and on the other hand they are requiring the cities in Shoshone County to build sewer systems and other infrastructure they cannot afford.

"That takes a toll on our older residents," she said. "They can't afford to pay for all of that.

"And now we are going to cut their services," she added. "How do you pick and choose? That really bothers me."

The cuts are coming because Congress did not reauthorize the SRS program, which was created in 2000 as a temporary solution to help timbered counties diversify their economies.

Sherry Krulitz said counties have been fighting for a permanent funding solution ever since then.

Krulitz's husband, Art, said there is a glimmer of hope, but nobody's sure if it will be successful.

"We have heard that Congress will take this up again in the first quarter of this year," he said. "So there is some hope, but they have been fighting this for years."

The former county commission and the three school superintendents formed a group about a year ago called Not Without a Fight Coalition, which has now become a new clearinghouse for SRS news.

Moderator Ron Roizen said the group did try to form a broader coalition, but didn't get much traction. But they held a successful conference on the subject in September.

"If we cannot get more activity out of our federal lands, we really need to look for some new ways to generate money," he said.

In the meantime, Fitzgerald said the county commission is going to look for ways to cut the budget without doing too much damage.

"That was nearly 100 percent of our roads department," the commissioner said. "We are going to have to do a lot of revamping. Even if it's just roads that are cut, the whole county is going to feel it."

Fitzgerald, who also sits on the Kellogg School Board, said he will be buried in the SRS funding issue but he is dedicated to working through the process.

"I think the sheriff summed it up earlier this week when he said this could be catastrophic," he said. "I am in a pretty tough spot."