Cash-strapped USPS considers emergency rate hike - New York News

Cash-strapped USPS considers emergency rate hike

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WASHINGTON -

It soon could cost 49 cents to mail a letter.

The postal Board of Governors said Wednesday it wants to raise the price of a first-class stamp by 3 cents, citing 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," board 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 rise by a cent, to 34 cents. The cost to mail a letter to an international destination would jump 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 Thursday.

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 expects to lose $6 billion this year and is seeking help from Congress to fix 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 and phase out most door-to-door delivery. 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.

Postal Service supports the proposed delivery changes. It also is seeking to reduce its $5.6 billion annual payment for future retiree health benefits. It missed two of those payments in 2012, one deferred from the previous year, and is expected to miss another at the end of this month, when its fiscal year ends.

The Senate bill would change the method by which the retiree health costs are calculated, as well as allow the agency to ship alcoholic beverages and compete with private shippers.

Postmaster General Patrick Donahoe was to appear before a Senate panel on Thursday to press lawmakers for swift action.

The House Oversight and Government Reform Committee approved a bill this year that would allow the Postal Service to gradually shift from door-to-door delivery to cluster box and curbside delivery. No Democrats voted for the measure.

The bill, introduced by the chairman, Rep. Darrell Issa, R-Calif., also would end Saturday delivery and change how pension and retiree health costs are calculated.

Issa said the proposed rate increases were merely a short-term solution and that the agency's "costly, inefficient delivery" system needs to be fixed. Such increases could hurt businesses that rely on the post office, he said.

The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control.

___

Online:

Barnett's letter: http://tinyurl.com/onoth9q

By ANDREW MIGA Associated Press


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