The House of Representatives and United States Senate passed the 2010 Continuing Resolution that contained a provision providing the Postal Service $4 billion of financial relief. The relief means the Postal Service owed $1.4 billion on September 30, not $5.4 as previous law required. The President has signed the legislation into law.
With this financial relief the Postal Service is provided some breathing room to ensure it can remain solvent, but for how long? Will the relief get the Postal Service through all of 2010 or will rising costs and declining mail volume bring it down before year's end?
Simple financial relief as provided has been called a "band-aid" by congressional leaders in the House and Senate. Key postal oversight committee members are on record that significant Postal Service structural changes are needed, but when will they come?
It's very difficult to pass substantive postal legislation in any year but it's impossible in an election year like 2010. That suggests the Postal Service will have to do the best it can through 2010 and look for more financial relief next September when the payment due increases to $5.5 billion. 2011 looks to be the first opportunity to address the Postal Service's structural problems legislatively.
The Postmaster General laid out his legislative wish-list in his National Postal Customer Council Day address on September 16. He asked for the Congress to ease the health benefit liability funding requirement, a request that has been granted for 2009.
He next asked for the ability to adjust the capacity of the Postal Service's network to bring it in line with reduced mail use. Along with the network flexibility request Mr. Potter said that eliminating Saturday delivery could save the Postal Service as much as $3.5 billion a year.
And finally the Postmaster General would like the flexibility to "expand product offerings into new areas that leverage the Postal Service's unmatched scope, reach and presence of its distribution, transportation and retail networks to achieve their full revenue potential."
More congressional assistance with the health benefit liability payment requirement may be the most achievable item on Mr. Potter's list. From there it gets tougher. The Postal Service has been attempting to streamline its infrastructure for most of Mr. Potter's tenure as Postmaster General. They have had some success but it's been with facilities that have been "under the radar," as postal officials put it. The biggest success has been in the closure of air mail facilities and annexes, places mostly out of the public's eye.
The consolidation and closing of plants, post offices, stations and branches is another matter. There the Postal Service continues to run into a buzz-saw of political opposition that severely limits much chance of success. If postal officials thought they had political opposition in 2009, wait until next year when members of Congress are campaigning for re-election. It's rare to find a member of Congress that does not oppose closing a post office in their district or state.
The termination of Saturday mail delivery will remain on the front burner, but there's still substantial opposition in the mailing industry, from the postal unions, and on Capitol Hill. Unlike closing a post office, however, the public seems agreeable to eliminating Saturday delivery if it means holding down postage rates. The elimination of Saturday delivery possibly could occur in 2011 but there's a lot of work left selling the idea to skeptics that think it would be a big mistake.
Finally there is the Postal Service's desire to have greater flexibility to expand product offerings to leverage the massive scope and reach of the system. It's an understandable request that has merit, but it also can be a hard sell. For years Postmasters General have sought greater product offering flexibility and they've run into the same basic question: should a government agency with a legal monopoly be allowed to compete with the private sector?
So where does that leave us? The Postal Service will continue its efforts to reduce the size of the network and employee complement as it did this past year. Mail volume decline may slow as the economy begins to recover, but costs will continue to exceed revenue. The Postal Service projects it will lose about $7 billion when the fiscal year ends on September 30, 2010.
Senator Tom Carper (D-DE), chairman of the postal oversight subcommittee, said when debating the Postal Service financial relief provision that "this is a band-aid we will accept, but it's not the solution we need." Senator Tom Coburn (R-OK) said that "this is the third time in five years that we've tried to put a patch on the Postal Service. We duck the hard problems. We don't want to offend anybody. What we have to do is to start thinking long term. We have to start being about a vision of America that is financially healthy, and we have to swallow the hard, tough medicine of getting there."
Senator Coburn also said there was a key component of S. 1507 that was approved by the Committee on Homeland Security and Governmental Affairs "that has been ignored in this CR, the negotiation of labor rates in the next round" of contract negotiations. Senator Coburn was referring to the provision in S. 1507 that would require the arbitrator to consider the financial condition of the Postal Service.
Although that provision was not made law, its bi-partisan approval by the Senate postal oversight committee sends a strong signal. The upcoming negotiations between the Postal Service and the four major postal unions are critically important to the future of the Nation's postal system. Modest changes to the current labor contracts will do little to brighten the Postal Service's future. Breakthrough labor contracts, on the other hand, could give the Postal Service a fighting chance to survive in the 21st Century. Whether or not the financial health of the Postal Service was considered in past contract decisions, it should be front and center this time around.
Alliance of Nonprofit Mailers1211 Connecticut Ave NW, Ste 610Washington DC 20036-2705202-462-5132
With this financial relief the Postal Service is provided some breathing room to ensure it can remain solvent, but for how long? Will the relief get the Postal Service through all of 2010 or will rising costs and declining mail volume bring it down before year's end?
Simple financial relief as provided has been called a "band-aid" by congressional leaders in the House and Senate. Key postal oversight committee members are on record that significant Postal Service structural changes are needed, but when will they come?
It's very difficult to pass substantive postal legislation in any year but it's impossible in an election year like 2010. That suggests the Postal Service will have to do the best it can through 2010 and look for more financial relief next September when the payment due increases to $5.5 billion. 2011 looks to be the first opportunity to address the Postal Service's structural problems legislatively.
The Postmaster General laid out his legislative wish-list in his National Postal Customer Council Day address on September 16. He asked for the Congress to ease the health benefit liability funding requirement, a request that has been granted for 2009.
He next asked for the ability to adjust the capacity of the Postal Service's network to bring it in line with reduced mail use. Along with the network flexibility request Mr. Potter said that eliminating Saturday delivery could save the Postal Service as much as $3.5 billion a year.
And finally the Postmaster General would like the flexibility to "expand product offerings into new areas that leverage the Postal Service's unmatched scope, reach and presence of its distribution, transportation and retail networks to achieve their full revenue potential."
More congressional assistance with the health benefit liability payment requirement may be the most achievable item on Mr. Potter's list. From there it gets tougher. The Postal Service has been attempting to streamline its infrastructure for most of Mr. Potter's tenure as Postmaster General. They have had some success but it's been with facilities that have been "under the radar," as postal officials put it. The biggest success has been in the closure of air mail facilities and annexes, places mostly out of the public's eye.
The consolidation and closing of plants, post offices, stations and branches is another matter. There the Postal Service continues to run into a buzz-saw of political opposition that severely limits much chance of success. If postal officials thought they had political opposition in 2009, wait until next year when members of Congress are campaigning for re-election. It's rare to find a member of Congress that does not oppose closing a post office in their district or state.
The termination of Saturday mail delivery will remain on the front burner, but there's still substantial opposition in the mailing industry, from the postal unions, and on Capitol Hill. Unlike closing a post office, however, the public seems agreeable to eliminating Saturday delivery if it means holding down postage rates. The elimination of Saturday delivery possibly could occur in 2011 but there's a lot of work left selling the idea to skeptics that think it would be a big mistake.
Finally there is the Postal Service's desire to have greater flexibility to expand product offerings to leverage the massive scope and reach of the system. It's an understandable request that has merit, but it also can be a hard sell. For years Postmasters General have sought greater product offering flexibility and they've run into the same basic question: should a government agency with a legal monopoly be allowed to compete with the private sector?
So where does that leave us? The Postal Service will continue its efforts to reduce the size of the network and employee complement as it did this past year. Mail volume decline may slow as the economy begins to recover, but costs will continue to exceed revenue. The Postal Service projects it will lose about $7 billion when the fiscal year ends on September 30, 2010.
Senator Tom Carper (D-DE), chairman of the postal oversight subcommittee, said when debating the Postal Service financial relief provision that "this is a band-aid we will accept, but it's not the solution we need." Senator Tom Coburn (R-OK) said that "this is the third time in five years that we've tried to put a patch on the Postal Service. We duck the hard problems. We don't want to offend anybody. What we have to do is to start thinking long term. We have to start being about a vision of America that is financially healthy, and we have to swallow the hard, tough medicine of getting there."
Senator Coburn also said there was a key component of S. 1507 that was approved by the Committee on Homeland Security and Governmental Affairs "that has been ignored in this CR, the negotiation of labor rates in the next round" of contract negotiations. Senator Coburn was referring to the provision in S. 1507 that would require the arbitrator to consider the financial condition of the Postal Service.
Although that provision was not made law, its bi-partisan approval by the Senate postal oversight committee sends a strong signal. The upcoming negotiations between the Postal Service and the four major postal unions are critically important to the future of the Nation's postal system. Modest changes to the current labor contracts will do little to brighten the Postal Service's future. Breakthrough labor contracts, on the other hand, could give the Postal Service a fighting chance to survive in the 21st Century. Whether or not the financial health of the Postal Service was considered in past contract decisions, it should be front and center this time around.
Alliance of Nonprofit Mailers1211 Connecticut Ave NW, Ste 610Washington DC 20036-2705202-462-5132
