Fix for Postal retirement payments gaining ground

Legislation that would effectively allow the Postal Service to hold rates steady until 2006 is likely to reach the House floor next week, according to congressional staff.

The bill, H.R. 735, aims to alter how much money the agency pays into the Civil Service Retirement System. Last November, the Office of Personnel Management found that under the current system, the Postal Service would pay about $71 billion-the number has since been modified to $78 billion-more than it needed to cover the future costs of CSRS enrollees' pensions. OPM conducted the review at the request of the General Accounting Office, which has been trying to get a better handle on the Postal Service's retirement and health care liabilities.

The House bill, along with similar legislation in the Senate, S. 380, would lower the Postal Service's payments to the fund, but would have no impact on payouts to retirees. If enacted, the legislation would reduce the Postal Service's liability by $2.9 billion this year alone. That would enable the agency to pay down its debt to the Treasury, now totaling $11 billion, and hold mailing rates steady for three years. Without the change, the agency would have to increase rates next year.

Both bills have broad bipartisan support. The only possible sticking point is an amendment being contemplated by Rep. Henry Waxman, D-Calif. Under current law, costs for a retiree's military service is covered by the Treasury Department, not the Postal Service. The legislation would require the Postal Service to pick up the tab. Waxman opposes such an approach and his amendment, which is still be drafted, would somehow prevent the Postal Service from paying the military portion of a retiree's pension.

OPM officials have told congressional aides that they would recommend a veto if the bill is modified. Rep. Tom Davis, R-Va., chairman of the House Government Reform Committee and co-sponsor of the House bill, agrees with Waxman, but congressional aides say he is not willing to have a showdown with the White House on this issue.

"To kill this bill would be like voting for a rate increase," said one congressional staffer. During a markup of the bill last month, Davis suggested that the issue of military service could be handled in future legislation.

In other postal news, members of the House Appropriations Transportation, Treasury and Independent Agencies Subcommittee Thursday were supportive of the agency's request for additional security funding. The agency is seeking $350 million to continue upgrading facilities to combat acts of terrorism, such as the anthrax attacks in October 2001. While the committee did not vote on the proposal, members on both sides of aisle said the taxpayer, not the ratepayer, should pay for homeland security improvements. Since Sept. 11, 2001, Congress has appropriated $800 million to the Postal Service for security purposes.