Postal Board raises rates again

The Postal Service's board of governors announced May 8 that they will increase rates-again. The decision comes just four months after the board instituted a 4.6 percent rate hike. The new increases, averaging 1.6 percent, will go into effect July 1 and may result in a new focus on reform of the troubled agency. While the price of the basic first-class stamp will not increase under the new rates, many other costs will. Postcards will go up one cent. Express Mail and certified mail prices also increase, as will costs to such major mailers as magazine and catalogue publishers. The increases are necessary to soften the impact of an economic slowdown, rising fuel costs and higher than anticipated health care costs, according to postal officials. The governors "reluctantly decided to adjust the rates to make up a shortfall of about $975 million," board chairman Robert Rider said. Essentially, the board voted to put money back into its original January 2000 request for higher rates. By law, the board sends a recommendation for new rates to the independent Postal Rate Commission. Following a 10-month review, the rate commission can make adjustments. It did just that last fall, suggesting a 4.6 percent increase rather than the requested 6 percent. With a unanimous vote, the board can overrule the rate commission, which is what happened during a closed meeting May 7. Even with the additional hike, the board is expected to file a new rate case this summer. The action is getting the attention of key players on Capitol Hill. Senate Majority Leader Trent Lott, R-Miss., House Majority Leader Dick Armey, R-Texas, House Majority Whip Tom Delay, R-Texas and House Government Reform Committee Chairman Dan Burton, R-Ind., individually sent letters to the board asking that they not increase rates. Congressional sources said the news of another rate increase will likely push leadership to increase its scrutiny of postal affairs. At a hearing two weeks ago, Burton said Postal Service reform will become a priority for his committee. Agency leaders complain that they do not have the flexibility needed to confront their current financial plight. While agreeing that some new flexibility may be necessary, major mailing groups argue that agency managers have failed to make significant strides in productivity despite advances in automation. Further, they argue that the agency failed to prepare for the economic slowdown. "They overestimated their income when they went into the last rate case," says Gene Del Polito, president of the Association of Postal Commerce, a trade group representing mailers. "They could have developed best practices plans to pull down costs. They have access to the same information that everybody in the private sector has. How is it that the private sector could see it and adjust?" Earlier this year, the board announced plans to save $2.5 billion by 2003 by taking such actions as halting all capital projects for the remainder of the fiscal year. Rate increases only serve as a downward spiral, says Del Polito. Mailers will curtail activities, leading to even slower growth for the Postal Service. In fact, says Del Polito, many of his association's members are already looking at plans to reduce the number of catalogues they send. Seeing that the Postal Service faced $3 billion in losses this year, the General Accounting Office on April 4 added the Postal Service's long-term outlook and its efforts to make significant organizational changes to its "high-risk" list, which identifies government agencies and programs vulnerable to fraud, waste, abuse and mismanagement. The board meeting was William Henderson's last as postmaster general. The 30-year postal service veteran leaves the agency at the end of the month. Observers speculate that his successor will be Deputy Postmaster General John Nolan. Stephen Goldsmith, former mayor of Indianapolis and a Bush campaign advisor, and Gary Gensler, former treasury undersecretary, have taken their names out of consideration. The board still hopes to name a new postmaster general before Henderson leaves on May 31.
Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


When you download a report, your information may be shared with the underwriters of that document.