WASHINGTON - The postal board of governors said Wednesday that it wants to raise the price of a first class stamp by 3 cents to 49 cents, citing the agency’s “precarious financial condition” and the uncertain prospects for postal overhaul legislation in Congress.
“Of the options currently available to the Postal Service to align costs and revenues,increasing postage prices is a last resort that reflects extreme financial challenges,” board Chairman Mickey Barnett wrote customers.
The rate proposal must be approved by the independent Postal Regulatory Commission. If the commission accepts it, the increase will become effective Jan. 26.
Under federal law, the post office cannot raise its prices more than the rate of inflation unless it gets approval from the commission. In seeking the increase, Barnett cited “extraordinary and exceptional circumstances which have contributed to continued financial losses” by the agency.
The Postal Service has already cut back 22,000 delivery routes, laid off 203,000 workers and trimmed its annual operating costs by $16 billion since 2006 in an attempt to reach profitability, he added.
As part of the rate increase request, the cost for each additional ounce of first-class mail would increase a penny to 21 cents while the price of mailing a postcard would rise by 1 cent, to 34 cents. The cost to mail a letter to an international destination would jump 5 cents to $1.15.
Many consumers won’t feel the increase immediately. Forever stamps bought before an increase still would cover first-class postage. The price of new forever stamps would be at the higher rate, if approved.
The Postal Service also said it would request price increases totaling 5.9 percent for bulk mail, periodicals and package service rates, according to a filing to be made with the commission today.
Media and marketing businesses that rely on postal services said a big increase in rates could hurt them and lower revenue and postal volume, which already is in decline because of the increase in electronic communications.
Rafe Morrissey, the Greeting Card Association’s vice president of postal affairs, said the rate increases were “no substitute for common-sense, structural reforms” and the group hoped that they would be rejected.
“Raising rates or cutting critical services will exacerbate the Postal Service’s current predicament by driving away much-needed mail volume to other competitors,” he said. “Pursuing both simultaneously, as some propose, is a recipe for disaster.”
A group representing magazine publishers also said a rate increase will worsen the decline in mail volume.
“No private company would increase prices when sales are already plummeting,” Mary Berner, chief executive officer of the Association of Magazine Media, said in an email.
The Postal Service expects to lose $6 billion this year - after a $15.9 billion loss last year - and is seeking help from Congress to fix its finances.
Barnett said the increases, if approved, would generate $2 billion annually for his agency. The agency last raised postage rates Jan. 27, including a penny increase in the cost of first-class mail to 46 cents.
The Postal Service unsuccessfully sought an emergency 5.6 percent rate increase in 2010, citing the recession. The commission acknowledged that the recession had hurt revenue, but said the rate request was more of an attempt to address long-term structural problems.
Barnett said the post office would reconsider its rate request if Congress passes legislation to put the agency’s finances back on track. The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control.
A bipartisan bill in the Senate would end Saturday mail delivery after one year and cease door-to-door delivery for new residential and business addresses.
The agency said ending Saturday mail delivery would save $2 billion each year. But many lawmakers, along with postal worker unions, have resisted such changes, saying they would inconvenience customers, particularly those in rural areas.
The Postal Service supports the proposed delivery changes. It also is seeking to reduce its $5.6 billion annual payment for future retiree health benefits. It missed two of those payments in 2012, one deferred from the previous year, and is expected to miss another at the end of this month, when its fiscal year ends.
The Senate bill would change the method by which the retiree health costs are calculated, as well as allow the agency to ship alcoholic beverages and compete with private shippers.
Postmaster General Patrick Donahoe was to appear before a Senate panel today to press lawmakers for swift action.
Meanwhile, the House Oversight and Government Reform Committee approved a bill this year that would allow the Postal Service to gradually shift from door to-door delivery to cluster box and curbside delivery. No Democrats voted for the measure.
The House bill, introduced by the chairman, Rep. Darrell Issa, R-Calif., also would end Saturday delivery and change how pension and retiree health costs are calculated.
Issa said the proposed rate increases were merely a short-term solution.
“While some rate increases may be necessary, the long term key to USPS’ future is addressing its costly, inefficient delivery network,” he said. Failure to address those costs will force “a string of rate increases much larger than the ones today that will inevitably trigger an irrecoverable death spiral for the agency.”
Rep. Elijah Cummings of Maryland, the oversight panel’s ranking Democrat, said the Postal Service can’t solve its financial problems alone.
“It is Congress’ responsibility to put the Postal Service back on the path to solvency by passing a comprehensive reform bill that encourages innovation and new product development,” Cummings said in an email.
Information for this article was contributed by Andrew Miga of The Associated Press; by Alexei Koseff of McClatchy Newspapers; and by Angela Greiling Keane of Bloomberg News.
Front Section, Pages 1 on 09/26/2013