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Gary Horton: When budget runs low, just shut it down

Full Speed to Port!

Posted: December 15, 2009 10:11 p.m.
Updated: December 16, 2009 4:55 a.m.
The current financial plight of the U.S. Postal Service is becoming well known. The situation exposes the difficulties government institutions face when forced to confront fiscal challenges and downsizing.

We love to heap woe and blame on government bureaucrats, but the problems aren’t always the bureaucrats’ fault. Strong political forces often constrain fiscally beneficial action, and this dysfunction impacts government agencies large and small.

The Postal Service’s business is down about 9 percent this year and will drop perhaps another 13 percent the next. The service is running a budget deficit of $7 billion in 2009 that could balloon to $13 billion in 2010. Thank the Internet and e-mail for the sudden revenue crash.

Clearly, the shift to digital media wasn’t on the radar decades ago when America was plastered with post offices and populated with postal couriers.

Today, the Postal Service is America’s second-largest employer, with 656,000 employees working from 33,000 offices.

Top postal management suggests closing approximately 1,000 offices to help balance overhead to current revenue. Harsh medicine and necessary, too.

But law mandates the Postal Service can’t close an office without congressional approval. Small-town congressmen vying for reelection won’t win votes by closing the locals’ neighborhood post offices.

Come to think of it, few politicians willingly hoist themselves up on sacrificial altars for any fiscal prudence damaging to their own voting constituency.

I know a thing or two about downsizing, and I’ve learned fiscal prudence the hard way. Before the housing crash, my firm was the third-largest landscape company in California.

When housing vaporized, so did our revenue, and we had to downsize rapidly or die with the industry. We shed 1,000 employees, closed three non-performing offices, sold the real estate and saved the cash.

Despite 80 percent of our clients vanishing, it looks like we’ll make it through this challenge. Why? Because we faced up to core problems early. Our company had too much capacity and overhead for the sharply reduced demand and revenue.

The secret to effective cost-cutting is to identify redundancies and “just shut them down.”

Furloughs and percentage wage cuts are stopgaps and can create lingering problems of their own.

Sometimes these half-steps aren’t enough. You’ve got to completely staunch the bleeding. Life and business change can be tough, but decisive action to meet change is often the correct action.

Congress is loath to let the Postal Service act decisively — too many congressional careers are on the line. So the Postal Service is partially hamstrung from outside political forces.

That brings us to California and the William S. Hart Union High School District.

California is in a spiral of decreasing revenues, and facing rising costs, but California politicians don’t have the guts to straightforwardly shut down redundancy and unnecessary expense — votes could be lost.

So we suffer demotivating half-steps of furloughs and reductions that dilute and cheapen all California’s operations with across-the-board funding cuts. We should give a hard look at what we actually need and what we can leave behind.

California boasts world-class universities whose reputation and operations are now compromised from broad funding cuts.

But do we really need a University of California Merced? It’s halfway to nowhere with more cows than students. Shut it down, turn off the lights, cut the employees and sell the land. Boom! Half a billion saved and another half-billion earned. Leave the other U.C. schools fully funded.

And California State University Channel Islands? We got along fine without “the Dolphins” for decades.

Those kids can attend Northridge or L.A. Shut the Dolphins down. But don’t cheapen all of the fine Cal State schools because we’ve imprudently overloaded overhead with too many campuses.

Ditto with prisons. We can cut 35,000 non-violent inmates using GPS anklets and parole. Fine. But rather than removing 5 percent from each prison, let’s eliminate redundant facilities and shut a couple down to save valuable cash.

Professors, guards and locals will lament. But they’ll find new work, like so many of the millions of private enterprise workers who have been motivated to find new employment during this recession.

In California’s financial fix you’ve got to shut off all redundancies to preserve the quality core.

So now comes the Hart district, caving into 10 years of Castaic crying for a high school of its own. Fine. Except the district faces declining enrollment. Why build more facilities when school population is falling? Why build to appease Castaic constituents? This is a fiscal mistake we can stop before it happens.

My high school was a 15-minute drive from home, a trip much longer than from Lake Hughes to Stevenson Ranch. It didn’t kill me and it won’t kill Castaic residents. Let them bike, drive or bus, but for heaven’s sake don’t build a redundant campus, incurring the perpetual cost of keeping it maintained and staffed.

We shouldn’t worry about hurt feelings. Castaic will get on. Channel Islands students will transfer. U.C. Merced students will matriculate. Rural farmers will still get their subsidy checks and Netflix DVDs. Everyone will eventually get over the change.

But we’ve got to stop the fiscal half steps. We’ve got to stop the dithering. We’ve got to stop wasteful redundancy and “just shut it down.”

Gary Horton lives in Valencia. His column reflects his own views and not necessarily those of The Signal. “Full Speed to Port!” appears Wednesdays in The Signal.


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