Postal Service projects $1.8 billion budget shortfall
Rate increase will not offset shortage, officials say.
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.