US Postmaster general warns of rate hike if reform bill stalls

The U.S. Postal Service will be forced to seek a double-digit rate increase if overhaul legislation is not passed soon, Postmaster General Jack Potter said Monday.
Potter urged the thousands of mailing industry employees at the National Postal Forum to “get up to Capitol Hill” and tell their representatives today that “it’s important to bring a close to this legislative process.”

The postal bill has passed the House Government Reform and Judiciary committees, as well as the the Senate Governmental Affairs Committee, but it has not been scheduled for a floor vote in either chamber.

Potter reiterated his pledge to hold rates stable until 2006, but said swift passage of the bill is critical for the agency’s financial planning, since it takes about 16 months for a rate increase to go into effect.

The legislation, which has been in the works for about six years, would transfer retirement costs to the Treasury Department, freeing up revenue for the agency. It would also give the Postal Service more authority to set its own rates.

“The law has to be changed,” said David Fineman, chairman of the Postal Service board of governors. “The ratemaking process makes no sense, our ability to compensate our executives makes no sense.” He said the bill could “very well be voted on in the next few weeks.”

Fineman said in an interview that even if no vote is held this year, the legislation has “a very, very good chance of being passed by the middle of March” and would significantly lessen the need for a rate increase request.

Although the bill has bipartisan support, it faces major scheduling obstacles while Congress is dealing with must-pass bills. The chairmen of the Senate and House Budget committees have expressed concern over the bill’s cost, Fineman said, although he contended the legislation ultimately will be deficit-neutral.