The city clerk in Holy Cross does not spend much time at her desk these days. Instead, she pitches in as needed for the cash-strapped village of about 200 people.

Connie Walker was laid off because of a lack of town funds, but she still performs such tasks as preparing City Hall for a bingo game to help a family pay for a funeral -- for no pay. She even drops by to pay city bills, open mail and answer the phone.

Holy Cross, about 420 miles southwest of Fairbanks, is one of dozens of rural communities across the state facing serious financial problems -- or in some cases that have shut down -- since the state ended a revenue-sharing program.

"We've got no money to plow the roads," said Holy Cross Mayor Jeffrey Dementieff. "I've been having to ask for volunteers."

Revenue sharing and matching grants allowed villages to perform maintenance and small construction projects. Both programs were vetoed by the governor in 2003 as the state moved to close the gap between spending and income.

In the late 1960s, when construction of the trans-Alaska oil pipeline was under consideration and Alaska native leaders questioned how it would make their lives better, they were told that villages should form municipalities and participate in revenue sharing, said Kevin Ritchie, executive director of the Alaska Municipal League.

"It didn't create some huge political infrastructure," he said. "But it was enough to keep the lights on, have a city clerk that collected utility bills, things like that."

According to the municipal league, nine villages have ceased day-to-day operations. Eighteen have serious management or financial problems and 39 communities have financial problems so severe they could be insolvent in two years.

Holy Cross, which is accessible only by airplane or riverboat, is typical. Census data for 2000 show that 45 percent of its residents live below the poverty line; of the town's 200 residents, only 56 have jobs. More than 96 percent of the population is Alaska Native. Like much of rural Alaska, residents rely on fishing and hunting to make up for cash they don't have.

Dropping services is affecting public safety, road maintenance, and other life and health issues, critics say. The layoffs of Walker and four other employees, including a heavy-equipment operator, has meant pothole problems on roads.

The state has more than $31 billion in the Alaska Permanent Fund, a savings account whose earnings politicians so far have been unwilling to tap.

With crude oil at more than $60 per barrel, the state's budget gap has disappeared. But the glut of state money from high oil earnings so far has not crossed over to help small cities. Meanwhile, the cost of fuel, a huge expense for villages, has climbed.

Becky Hultberg, spokeswoman for Gov. Frank Murkowski (R), said the state has provided help to small cities in the form of a small community energy assistance program and money for employee retirement expenses. She said Murkowski made "some very hard decisions" to keep the state solvent when he cut the revenue-sharing program.

But Hultberg said that with the revenue picture improved, "he is certainly willing to look at new solutions."

Laid off as city clerk for Holy Cross, Connie Walker still carries out some of her former tasks -- but as a volunteer.