Postal Service projects $1.8 billion budget shortfall

Even with a planned postage rate increase, the U.S. Postal Service expects to go nearly $1.8 billion in the red next year, Postal Chief Financial Officer Richard J. Strasser told the agency's board of governors Tuesday.

The agency plans a 5.4 percent rate increase in January, which would raise the cost of sending a first-class letter by two cents to 39 cents.

"We project revenue of $72.3 billion, an increase of 3.4 percent, to be offset by a like percentage increase in expenses," he said.

The agency, Stasser said, plans cost reductions of $1.1 billion, including work-hour reductions of 42 million hours, the Associated Press reported.

But, he noted, the post office also faces a congressionally imposed requirement to place $3.1 billion in an escrow account. Strasser also noted that costs are now expected to be higher than originally planned when the rate increase was approved by the board.

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