Postal Service Seeks Rate Increase to Help Close $20 Billion Budget Gap

Letter carrier Nancy Konstance collects last-minute tax returns outside the Main Post Office in Philadelphia, on Monday, April 17, 2006.  Taxpayers were given two extra days this year to file.   (AP Photo/Matt Rourke)
National Journal
Billy House
Add to Briefcase
See more stories about...
Billy House
Sept. 25, 2013, 9:22 a.m.

The U.S. Postal Ser­vice said Wed­nes­day it is seek­ing rate in­creases to raise $2 bil­lion, but it might re­con­sider if Con­gress can take ac­tion to help close its $20 bil­lion budget gap.

The new rates, if ap­proved, would take ef­fect Jan. 26. For in­stance, new pri­cing for single-piece first-class mail would in­clude:

  • Let­ters weigh­ing 1 ounce or less  — 3-cent in­crease to 49 cents
  • Let­ters weigh­ing over 1 ounce — 1-cent in­crease to 21 cents per ex­tra ounce
  • Let­ters to all in­ter­na­tion­al des­tin­a­tions (1 ounce) — 5-cent in­crease to $1.15
  • Post­cards — 1-cent in­crease to 34 cents

New pri­cing for stand­ard mail, peri­od­ic­als, pack­age ser­vices, and ex­tra ser­vices also will be ad­jus­ted as part of an of­fi­cial rate-in­crease fil­ing to the Postal Reg­u­lat­ory Com­mis­sion, sched­uled to oc­cur Thursday, ac­cord­ing to the an­nounce­ment Wed­nes­day. Those oth­er pri­cing de­tails were not yet avail­able.

“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,” ex­plained Postal Ser­vice Board of Gov­ernors Chair­man Mickey Barnett in a let­ter to some cus­tom­ers, re­leased Wed­nes­day.

“However, if these fin­an­cial chal­lenges were al­le­vi­ated by the timely en­act­ment of laws that close a $20 bil­lion budget gap, the Postal Ser­vice would re­con­sider its pri­cing strategy,” he also wrote. “We are en­cour­aged by the re­cent in­tro­duc­tion of com­pre­hens­ive postal-re­form le­gis­la­tion in Con­gress, and des­pite an un­cer­tain le­gis­lat­ive pro­cess, we are hope­ful that le­gis­la­tion can be en­acted this year.”

The pri­cing changes would come as the res­ult of a vote taken by the Postal Ser­vice’s Board of Gov­ernors, meet­ing this week in Kan­sas City, Mo.

The Postal Ser­vice—a quasi-gov­ern­ment­al en­tity—ac­know­ledges that its price in­creases are nor­mally capped at the rate of in­fla­tion as meas­ured by the Con­sumer Price In­dex. That would mean an al­low­able in­crease of only about 2 per­cent.

But a 2006 law also al­lows the Postal Ser­vice to seek a high­er rate in­crease bey­ond the CPI in in­stances of “ex­i­gent” cir­cum­stances — and that is what is be­ing pro­posed now. Such re­quests are to be made to the Postal Reg­u­lat­ory Com­mis­sion, which has 90 days to ap­prove them.

The Postal Ser­vice says it is fil­ing for such an “ex­i­gent” in­crease “due to ex­traordin­ary and ex­cep­tion­al cir­cum­stances which have con­trib­uted to con­tin­ued fin­an­cial losses.”

“The Postal Ser­vice re­cor­ded a $15.9 bil­lion net loss last fisc­al year and ex­pects to re­cord a loss of roughly $6 bil­lion in the cur­rent fisc­al year, and has an in­tol­er­ably low level of avail­able li­quid­ity even after de­fault­ing on its ob­lig­a­tion to make pre­fund­ing pay­ments for re­tir­ee health be­ne­fits,” the an­nounce­ment states.

In 2010, the Postal Ser­vice sub­mit­ted a re­quest for an ex­i­gent rate in­crease of 5.6 per­cent — far above the CPI cap — that would have brought in more than $3 bil­lion an­nu­ally. But the mail­ers fought that in­crease in court and it was de­railed.

In the let­ter to some cus­tom­ers Wed­nes­day, Barnett de­scribed the “pre­cari­ous fin­an­cial con­di­tion” of the Postal Ser­vice and the “un­cer­tain path to­ward en­act­ment of postal-re­form le­gis­la­tion” as primary reas­ons for seek­ing price changes above the CPI in­crease.

Barnett also wrote that that the price ad­just­ment above the CPI in­crease is ne­ces­sary to en­sure that the Postal Ser­vice will be able to main­tain and con­tin­ue the de­vel­op­ment of postal ser­vices of the type and qual­ity that Amer­ica needs.

Some of the same groups that lob­bied against the pre­vi­ous hike said Wed­nes­day they were dis­ap­poin­ted by the latest re­quest.

“The Board of Gov­ernors’ re­quest for an ‘ex­i­gent’ rate in­crease is a ter­rible sub­sti­tute for badly needed le­gis­lat­ive re­form of the U.S. Postal Ser­vice,” said Mary G. Bern­er, res­id­ent and CEO of MPA — The As­so­ci­ation of Magazine Me­dia.

The Greet­ing Card As­so­ci­ation also is­sued a state­ment ex­press­ing con­cern.

“The GCA and its nearly 200 mem­ber com­pan­ies are dis­ap­poin­ted in today’s fil­ing by the Postal Ser­vice’s Board of Gov­ernors,” said Rafe Mor­ris­sey, GCA’s Vice Pres­id­ent of Postal Af­fairs. “Ex­i­gency rate in­creases were meant to re­spond to ex­traordin­ary cir­cum­stances and are no sub­sti­tute for com­mon­sense, struc­tur­al re­forms that will put the Postal Ser­vice on sound and sus­tain­able fisc­al foot­ing.”

“It is our hope that the Postal Reg­u­lat­ory Com­mis­sion will, as it has in the past, deny this ex­i­gency rate in­crease,” Mor­ris­sey said.

What We're Following See More »
MAYBE MORE COMING
Cohn Rules Out Easing Russian Sanctions
7 hours ago
BREAKING
DON’T NEED COMMITTEE SUPPORT
Senate Intelligence Leadership Have Full Subpoena Authority
11 hours ago
THE DETAILS

Sens. Richard Burr and Mark Warner, the chairman and ranking member of the Senate Intelligence Committee, were granted broad subpoena power Thursday, as the committee "voted unanimously to give [Burr and Warner] the blanket authority for the duration of the investigation into Russia's election meddling and possible collusion with President Trump's campaign." The two leaders must agree, but no longer need the approval of the rest of the committee.

Source:
APOLOGIZES FOR ASSAULT
Republican Gianforte Wins Montana Special Election
11 hours ago
THE LATEST

Republican Greg Gianforte won the special election Thursday to fill the Montana House seat left vacant when Donald Trump selected former Congressman Ryan Zinke as Interior secretary. Gianforte, who lost a race for Montana governor in 2016, took 50 percent of the vote to Democrat Rob Quist's 44 percent. Gianforte assaulted Guardian reporter Ben Jacobs the night before the election and it was unclear if it would affect the race. In his victory speech, Gianforte apologized to Jacobs, saying "Last night, I made a mistake and I took an action that I cant take back ... I am sorry Mr. Ben Jacobs."

Source:
CITES CONFLICT OF INTEREST
Lieberman Withdraws from Consideration for FBI Job
1 days ago
THE LATEST
MINIMUM 2 PERCENT GDP
Trump Tells NATO Countries To Pay Up
1 days ago
BREAKING
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login