Postal Board approves rate hike, but says it's too small

The U.S. Postal Service Board of Governors today approved a 4.6 percent across-the-board rate hike, but argued that it won't be enough to keep USPS from piling up losses. The governors cleared the way for postal rates to increase Jan. 7, 2001, but filed a protest asking the Postal Rate Commission to consider a 6 percent across-the-board rate increase. Speaking at a board meeting Tuesday, Chairman Einar Dyhrkopp said the 4.6 percent increase fails to provide the Postal Service with enough revenue to fully fund operations or make necessary infrastructure improvements. "And the financial position of the Postal Service has worsened since the rate filing. We cannot accept a situation that threatens the ability of this organization to provide the levels of service the American people expect and deserve," Dyhrkopp said. The head of the Postal Rate Commission, Edward Gleiman, countered: "Based on the data they provided us, we concluded that unless there was a substantial amount of unforeseen costs, that they would break even or realize a surplus" this fiscal year. "I don't know what it means that financial conditions worsened. I don't know what happened and when it happened," he said. Postal Service officials changed their cost and revenue estimates--to the tune of $1 billion--after the docket closed, according to rate commission staff. Revenue projections dropped by $550 million and costs grew by $563 million. The rate commission staff is unclear why the numbers changed so dramatically. Postal Service officials said they will likely provide the commission with new data. There is no timeframe for a review of the governors' protest. It is likely that stakeholder groups will want to review any new data submitted by the Postal Service. In other financial news, the Postal Service, as expected, reported losses totaling $199 million in fiscal year 2000. The losses come despite improved productivity and overall growth in mail volume.