Postal funding could be tied to reform legislation

Efforts to reform the Postal Service are likely to become intertwined with the agency's attempts to get emergency funding for its fight against anthrax attacks. Postal Service officials estimate that it will cost $2 billion to install new security devices designed to decontaminate mail laced with anthrax bacteria. Agency officials are negotiating with White House and congressional budgeters on how to pay for the equipment.

Last week President Bush announced plans to give the agency $175 million and the Postal Service's Board of Governors approved spending of at least $200 million to buy or lease irradiation equipment. There is little doubt on Capitol Hill that the agency will ask for additional emergency funding. "Before we start giving taxpayer money of that magnitude, let's make sure we are not giving it to a sinking ship," said Robert Taub, chief of staff for Rep. John McHugh, R-N.Y., the leading advocate of postal reform. McHugh has drafted a new version of postal reform legislation that would give the agency more flexibility in setting rates and would prohibit ventures into electronic commerce and other schemes that fall outside the Postal Service's core mission. During the past six years, McHugh has failed to get other members to pay attention to, let alone pass, postal reform legislation. The Postal Service is self-funded, getting less than 1 percent of its operating budget from the general treasury. Even before the war on terrorism, the agency expected losses of more than $1.6 billion this fiscal year. Data for the first month of fiscal 2002 are not good, showing overall mail volume is down 6.6 percent from the same period in 2000. On Sept. 10, the board approved filing a rate case, the second in two years, seeking an overall increase of nearly 9 percent. Without reform, many postal observers fear that rates will continue to climb for the foreseeable future. It's prudent for Congress to take up reform at the same time as an emergency funding package, said Gene Del Polito, president of the Association of Postal Commerce, because the long-term health of the agency depends on it. "At the end of the day, we are in a unique situation that we have had 535 members of Congress focused on the Postal Service," added Taub. "Reform has to be a part of the debate. We have a fiduciary responsibility to the taxpayer."