Wednesday, September 25, 2013

Postal Service board files for emergency rate hike; not good news for rural, weekly newspapers

The Board of Governors of the U.S. Postal Service has voted to seek an emergency rate increase, blaming Congress for failure to act on postal reform that would cut the service's red ink. If approved by the Postal Regulatory Commission, the cost of a first-class stamp would go to 49 cents on Jan. 26, from the current 46 cents. The additional-ounce charge would be 21 cents, up from 20. Postcards would go up a penny, to 34 cents. Newspapers' rates would go up 5.9 percent.

In a letter addressed to postal customers, Board Chairman Mickey Barnett said, “If these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy. We are encouraged by the recent introduction of comprehensive postal reform legislation in Congress, and despite an uncertain legislative process, we are hopeful that legislation can be enacted this year.” While Congress sets the rules for USPS, no tax money supports the service.

Postal-rate increases are normally limited to the rate of inflation, but the Postal Service is allowed to seek larger increased in special circumstances that have made it lose money. "The service recorded a $15.9 billion net loss last fiscal year and expects to record a loss of roughly $6 billion in the current fiscal year, and has an intolerably low level of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits," it said in a news release.

The increase in newspaper mailing rates will hurt rural, weekly newspapers, which circulate primarily by mail. National Newspaper Association President Robert Williams said his lobbying group understands the service’s problems with Congress, but said a rate hike would actually worsens its problems. “We are doing our best to get Congress to understand that the Postal Service desperately needs help from Congress to address its cost structure, particularly in wrestling with the high cost of health care, as we all must,” Williams said. “Congress must make it possible for the Postmaster General to seek a more affordable path for retirees by realistically using the Medicare benefits that USPS is already paying for. We would hope Congress will see that this rate increase is going to simply make it tougher for all businesses and consumers to stay in the mail.” (Read more)

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