Saturday, April 09, 2005

Post Office Seeks Higher Stamp Prices

The Postal Service filed a request Friday seeking higher rates, and blames Congress for hike. The agency wants a 2-cent increase in first-class mail, and similar increases for other types of mail, to take effect early next year. "This rate increase is not required or needed for postal operations or postal expenses or postal salaries, or anything like that," Gerry McKiernan, USPS manager of media relations, told reporters. McKiernan said that the Postal Service is seeking the increase, 5.4 percent across the board, only because of a requirement that it establish an escrow fund with a $3.1 billion payment next year. Congress mandated the escrow requirement in 2003 when it passed a law reducing the amount of money the agency has to pay into its retirement system, which auditors said was being overfunded. Instead Congress ordered the money to be put into the escrow fund. Elimination of that fund has been included in bills that would make other changes in postal operations, but Congress has NOT acted on the proposals. "Absent the need to fill the obligation for the pension fund, the Postmaster General has said that we would not be filing the rate increase this year," he said. The agency has sought congressional action to eliminate that requirement. "Quiet conceivably, the Congress could change the law before the year is over, which would then obviate the need for the rate increase and we would rescind it," McKiernan said. The Postal Service is asking the Postal Rate Commission, which is independent, for an expedited ruling by next fall. If it gets its wish, that would mean a rate hike in January. But if the commission takes its usual 9 to 10 months, the increase wouldn't go into effect until the middle of 2006. And the result might not be two cents extra for a letter. "What the Postal Service requests isn't necessarily what it gets," reports de Vries. "The commission is free to modify this request and give the Postal Service none of what it wants, some of what it wants — or even more than it requested." Any increase also doesn't have to be the same across the board, in all classifications and for all rates. The last rate increase was three cents, in 2002
John E. Potter: Postmaster General,United States Postal Service