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Postal Service’s board could decide as early as next week whether to request a special rate increase

Last updated: September 19. 2013 11:20PM - 872 Views
ANDREW MIGA Associated Press



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WASHINGTON — Postmaster General Patrick Donahoe said Thursday his agency is in “the midst of a financial disaster” and might need an emergency increase in postage rates to keep operating.


“The Postal Service as it exists today is financially unsustainable,” he told the Senate Homeland Security and Governmental Affairs Committee. It’s a message that the postmaster general has been delivering to Congress with regularity over the past several months.


Donahoe pressed lawmakers Thursday for swift action on legislation to fix his agency’s finances. Without help from Congress, the agency expects its multibillion-dollar annual losses to worsen. He warned that the agency’s cash liquidity remains dangerously low.


The post office expects to lose $6 billion this year. Last year the agency lost $16 billion.


“The Postal Service is quickly moving down a path that leads to becoming a massive, long-term burden to the American taxpayer,” he said.


Donahoe said the rate hike might be needed because his agency’s finances are so precarious and the prospects of quick congressional action are so uncertain.


The Postal Service’s board of governors could decide as early as next week whether to request a special rate increase.


Under federal law, the post office cannot raise its prices more than the rate of inflation unless it gets approval from the independent Postal Regulatory Commission. The Postal Service must cite exceptional circumstances in seeking an “exigent” or emergency rate hike.


Media and marketing firms that depend on postal services have said that a big rate hike could hurt their business. They say the impact of any rate hike would be compounded if it comes along with the regular annual rate increase expected to be announced later this year.


The agency last raised postage rates on Jan. 27. At the time, the cost of a first-class stamp went up by a penny, to 46 cents.


Lawmakers are considering cost-cutting moves that include ending Saturday mail delivery and door-to-door delivery. But many lawmakers, along with postal worker unions, have resisted such changes, saying they would inconvenience customers.


The Senate Homeland Security and Governmental Affairs Committee is considering a bipartisan proposal to stabilize the agency’s finances, including changing the method by which retiree health care costs are calculated.


Saturday mail delivery would be ended in a year and the Postal Service could start shipping alcoholic beverages to compete with private shippers such as FedEx under a bipartisan proposal by the committee’s chairman, Tom Carper, D-Del., and the panel’s ranking Republican, Tom Coburn of Oklahoma.


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