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Because of President Roosevelt's creation of the Siskiyou National Forest, and the reversion of Oregon and California Railroad lands to federal government control, by 1937 the U. S. Forest Service and the Bureau of Land Management were in charge of 70 % of the land in Josephine county, and a large part of the Illinois Valley.
Because this decreased the county's potential tax base, the government shared money earned from timber sales with the county, and payments in lieu of taxes from the federal government became a large part of its tax base.
In 1989, Josephine County received $ 16, 756, 000 in various federal payments ; by 1999, the payments had fallen to $ 9. 6 million.

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