GovernmentExecutive.com

Stamps for First Class mail might soon cost 39 cents. The U. S. Postal Service on Friday filed paperwork with the Postal Rate Commission, a five-member panel charged with regulating postage rates, to request an increase of 5.4 percent for most categories of mail.

The agency prepared the filing in less than two months after its board of governors told the Postal Service to begin the process in late February. It aims to put new rates into effect in early 2006.

The Postal Service requested the rate hike despite strong first- and second-quarter financial results from high mail volume, due in part to catalog mailings and direct marketing by financial services companies.

The Postal Service operates on a break-even basis. In the past, it has raised rates every three years, making money the first year, breaking even the second and losing money the third. Richard Strasser, chief financial officer of the Postal Service, said in February that the agency expects to earn $1 billion in net income this year and break even next year.

But this rate increase is designed to cover $3.1 billion the Postal Service must put in to escrow beginning in 2006. If Congress were to intervene and release the agency from this obligation, the Postal Service would withdraw the request for the increase.

Because this rate hike would not cover any growth in operating expenses, industry experts fear that it could be followed by another increase in 2007.

COMMENTS

• The postal service needs to manage themselves as a government entity. Stop offering gift ideas like stuffed animals, special wrapping paper, etc., and concentrate on providing the services that are needed. The Government is not supposed to compete with its citizenry so don't waste money buying goodies or sponsoring sporting events, etc. As for the increase, if it were raised to 40 as suggested by another reader you'd have more money to waste and still get a rate increase in the next couple years. USPS just keep it simple and deliver the mail! The extras that are offered, like delivery confirmation, aren't even worth the money as most often the system isn't updated timely, which gives consumers a sour taste and uses postal resources that could be better utilized. GovExec.com reader Posted April 11, 2005 2:22 PM
• Have you ever noticed that the USPS NEVER puts the cost of stamps at an even 5 cent or 10 cent interval? I have long suspected the reason for this is because the many people who buy 1 or 2 stamps at a time in from the dispensers rarely if ever use the 1 cent stamps they recieve as change. Often these stamps are discarded. Therefore, in essence, since these stamps are never redeemed, the USPS makes extra monies from them. So don't expect to see a 40 cent stamp any time soon. B. Ward Posted April 11, 2005 2:09 PM
• If the rate increase must take place, USPS should increase to 40 cents. The USPS could use the additional funds generated to defray a further increase and consumers wouldn't have to deal with handling as much change. Russ Collins Posted April 11, 2005 10:50 AM