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Proposed postal hike faces scrutiny

by ANDREW MIGA Associated Press on September 26, 2013 11:00 AM

WASHINGTON — The Postal Service’s proposal to raise the price of mailing a letter to 49 cents is sure to face scrutiny from lawmakers as a Senate panel considers bipartisan legislation to overhaul the cash-strapped agency.

Postmaster General Patrick Donahoe’s appearance today before the Senate Homeland Security and Governmental Affairs Committee comes one day after the post office said it wanted to raise the price of a first-class stamp by 3 cents. He’s pressing lawmakers to act quickly on legislation to fix his agency, which expects to lose $6 billion this year.

The Postal Service’s Board of Governors, in its rate hike request, cited the agency’s “precarious financial condition” and the uncertain prospects for postal overhaul legislation in Congress.

“Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges,” the board’s chairman, Mickey Barnett, wrote customers.

The rate proposal must be approved by the independent Postal Regulatory Commission. If the commission accepts it, the increase would become effective Jan. 26.

Under federal law, the post office cannot raise its prices more than the rate of inflation unless it gets approval from the commission. In seeking the increase, Barnett cited “extraordinary and exceptional circumstances which have contributed to continued financial losses” by the agency.

As part of the rate increase request, the cost for each additional ounce of first-class mail would increase a penny, to 21 cents, while the price of mailing a postcard would also rise by 1 cent, to 34 cents. The cost to mail a letter to an international destination would increase 5 cents, to $1.15.

Many consumers won’t feel the increase immediately. Forever stamps bought before an increase still would cover first-class postage. The price of new forever stamps would be at the higher rate, if approved.

The Postal Service also said it would request price increases totaling 5.9 percent for bulk mail, periodicals and package service rates, according to a filing to be made with the commission today.

Media and marketing businesses that rely on postal services say a big increase in rates could hurt them and lower postal volume and revenues.

Rafe Morrissey, the Greeting Card Association’s vice president of postal affairs, said the rate increases were “no substitute for common-sense, structural reforms” and the group hoped they would be rejected.

The post office is seeking help from Congress to turn around its finances.

Barnett said the increases, if approved, would generate $2 billion annually for his agency. The agency last raised postage rates on Jan. 27, including a penny increase in the cost of first-class mail to 46 cents.

The Postal Service unsuccessfully sought an emergency 5.6 percent rate increase in 2010, citing the recession. The commission acknowledged that the recession had hurt revenues but said the rate request was more of an attempt to address long-term structural problems.

Barnett said the post office would reconsider its rate request if Congress passes legislation to put the agency’s finances back on track. But prospects in Congress are unclear.

A bipartisan bill in the Senate would end Saturday mail delivery after one year and cease door-to-door delivery for new residential and business addresses. The agency says ending Saturday mail delivery would save $2 billion each year. But many lawmakers, along with postal worker unions, have resisted such changes, saying they would inconvenience customers.

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