Republican bill adds to postal red tape, warns struggling USPS
The US Postal Service has hit out at postal reform proposals from Republicans in the US House of Representatives. It suggested that yesterday’s bill from Congressmen Darrell Issa and Dennis Ross was creating extra government bureaucracy that would slow progress in streamlining USPS operations.
“The bill appears to be based on the assumption that the Postal Service’s challenges result from too little regulation. The opposite is true,” said the Postal Service in a statement.
Issa’s Postal Reform Act proposes two new agencies – one to force through postal facility closures, another to oversee financial arrangements at any point the USPS falls behind in its payments into federal pension or benefit funds.
The first agency, the Commission on Postal Reorganisation, would see five presidentially-appointed commissioners tasked with closing enough post offices to cut $1bn in operating costs, enough mail processing facilities to save a similar amount and also 30% of USPS area or district offices. The plan would not allow USPS to have more than 10% excess processing capacity.
The bill would put forward rules allowing more alternative arrangements for postal access in rural areas to support post office closures where they are not self-sustaining.
The second agency proposed by the bill, the Postal Service Financial Responsibility and Management Assistance Authority, would form up when the USPS goes into liquidation problems, setting up a kind of receivership situation. The Authority would consist of five members and their staffs, and would disband once the USPS returns to financial sustainability.
The Authority would require the Postal Service to draw up an emergency budget, then restructure its operations so that expenses meet revenues and debts can be paid off. Powers within the bill would permit the renegotiation of existing union contracts as part of efforts to cut costs.
Extra borrowing
Issa-Ross bill – main proposals:
– Sets up Commission to oversee postal facility closures/consolidation
– Allows five-day per week delivery service
– Allows more alternative retail access in rural areas
– Sets up Authority to reign in USPS costs during periods of solvency concern
– Includes extra $10bn borrowing power for USPS during such “control periods”
– Requires worker wages and benefits to fall in line with other federal workers
– Reforms workers’ compensation, adding automatic move to retirement for those eligible
– Requires postal rates to reflect attributable costs for services
– Allows certain non-postal services: – a USPS advertising program, extra government/state government services
– Reforms postal procurement and contracting rules
During the Authority-led “control period”, the USPS would not be allowed to spend more than its budgeted revenue, and would be required to make progress towards long-term financial stability.
But, it would be allowed an extra $10bn of government borrowing.
The Postal Service yesterday insisted it does not need more borrowing authority, but instead requires reforms to its pension and benefit arrangements, which have seen surplusses and overpayments reaching into the tens of billions. The Issa-Ross bill does not allow any such reforms.
“The Postal Service does not need to incur additional debt — we need the money back that is already owed to us,” said the USPS statement.
USPS did applaud some of the measures within the Issa-Ross bill, particularly the proposal to allow it to move to a five-day-per-week delivery schedule.
“The bill’s provision to move to five-day delivery would save the Postal Service $3.1 billion annually,” said USPS.
Other measures within the Issa-Ross bill include requirements for workers’ pay and benefits to fall into line with other federal workers, and reforms of disability compensation including the automatic retirement of workers above retirement age.
Certain non-postal services would be allowed – namely a USPS advertising program to sell marketing space on its vehicles and at facilities – as well as more freedom to provide non-postal governmental and state governmental services.
Postal rate rise
Provisions within the Issa-Ross bill would also see postal rates increasing by as much as 5% where services do not cover their costs.
Although inflation-linked budget caps would remain in place, the bill would require any unused rate authority to be used to bring loss-making products or services up to break-even. Products or services recovering less than 90% of costs could see rate rises allowed outside the Consumer Price Index cap.
Potential impacts from the bill on postal rates has already raised concerns among mailers.
The Association of Business Media said yesterday that for periodicals, the bill could mean more than a 20% increase in postal rates over the next three years.
“This provision is simply untenable, and over the last few hours, ABM has already begun to mobilize its resources and align with allies to fight it,” said the group, which represents about 200 members in the business-to-business media, accounting for about 6,000 print and online media titles and more than $20bn in annual revenues.
The Postal Service again stressed the urgency of Congressional action yesterday, just a day after it notified the US Office of Personnel Management that it would have to stop its $115m fortnightly contributions to its federal pension fund.
It said yesterday: “Despite significant and ongoing cost cutting actions and progress on new revenue generation, the Postal Service is in danger of running out of cash as early as this October.”
