USPS may require rate hike in 2004
Despite a $1 billion profit in the first quarter of its fiscal year, the U.S Postal Service may have to request authority for another rate increase if Congress does not pass legislation reforming its pension payments.
Postmaster General John Potter told the new Presidential Commission on the U.S. Postal Service Wednesday that legislation is needed to change the amount the Postal Service pays into the Civil Service Retirement System or ratepayers would be overpaying into the fund by $71 billion. With legislative change, rates could remain stable through 2006.
The post office wants to change its payment formula so that it can apply the excess cash to operations, but that requires Congressional approval. The Bush administration proposed such a measure in December, but it will have to re-submit the legislation to the new congress.
“If Congress doesn’t act, we’ll need a rate change in 2004,” said USPS spokesman Gerry Kreienkamp.
Postal increased in July 2002, with the price of a first-class stamp going from 34 cents to 37 cents. USPS would have to apply this year to the Postal Rate Commission to get another increase next year, he said.
Greater pricing flexibility for the Postal Service will be one of the key issues facing the presidential commission, which was meeting for the first time.
“The key question is how can we continue to provide universal service to all Americans and still make it affordable in the face of potentially declining mail volume?” he said.
Potter cautioned that economic recession, bio-terrorism and electronic diversion have had a negative impact on mail volume. “Twenty-five percent of postal revenue comes from bills and payments-the segment of the mail most vulnerable to electronic diversion,” he said.
The meeting came one day after USPS announced its net income for the quarter ended Nov. 29 came on revenue of $16.3 billion. That was $300 billion less than projected, but costs were $500 million lower than anticipated due to efficiency increases, staff reductions and other cost savings, In the same quarter a year ago, the post office reported net income of $108 million on revenue of $15.4 billion.
