U.S. Postal Service Plans To Increase Stamp Prices

Posted by: Perry Smith in Santa Clarita News September 25, 2013 - 3:39 pm 0 145 Views

The United States Postal Service is seeking a 3 cent increase for postage stamps, based on a dire financial situation, a USPS spokesman said Wednesday.

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“We are filing for an increase,” said Rich Maher, USPS spokesman. “It’s actually going to be an exigent increase.”

Laws guide Postal Service officials on just how much they can raise the price of the stamps and services, Maher said, adding that inaction by Congress on several pieces of legislation have all but left their hands tied.
“A decision to raise prices is never one the Postal Service takes lightly, especially during the current environment, where our volumes are dropping,” he said. “But we believe that this increase above the consumer price cap is a reasonable and equitable course of action given our extreme financial challenges.”

Highlights of the new single-piece First-Class Mail pricing, effective Jan. 26, 2014 include:

Letters (1 oz.) — 3-cent increase to 49 cents
Letters additional ounces — 1-cent increase to 21 cents
Letters to all international destinations (1 oz.) — $1.15
Postcards — 1-cent increase to 34 cents

The moves are expected to raise approximately $2 billion in revenue, Maher said.

Under law, any price hikes should be in line with the Consumer Price Index, he said.

He also said the announcement only affects market-dominant services that under law can only be raised at the rate of inflation, such as First Class Mail, Standard Mail (such as advertising) and international letters. Shipping services prices, like Priority Mail, are not capped at the CPI and will be announced later in the year, he added.

That would have called for a 1 cent raise, but the circumstances, namely the USPS’ quarter-after-quarter reporting of losses in excess of hundreds of millions of dollars — as well as the USPS having other recourse under federal law — prompted the request.

“There’s specific things we need Congress to do to provide us the flexibility we need to respond,” Maher said.

There were several pieces of legislation that would have allowed the Postal Service more freedom to adjust operations, but they did not pass, Maher said.

If approved by Congress, the raise would take effect on Jan. 26, 2014.

The Postal Service has already reached its debt limit of $15 billion.

The Postal Service needs to save $20 billion annually by 2016, according to a statement from the USPS.

“To return the Postal Service to solvency requires a comprehensive approach, which is reflected in our updated Five-Year Business Plan,” said Postmaster General and CEO Patrick Donahoe.

“The plan provides an achievable roadmap to restore financial stability and preserve affordable mail service for the American public. The major elements of the plan must be pursued and executed within a short window of opportunity to avoid unsustainable losses and potentially becoming a long-term burden to the American taxpayer.”

Many of the savings cannot be achieved without the following legislative action, officials said:

Require a USPS Health Care Plan (resolves the Retiree Health Plan prepayment issue)
Refund the FERS overpayment and adjust the FERS payment schedule
Adjust delivery frequency (six-day package/five-day mail delivery)
Streamline the governance model
Allow USPS the authority to expand products and services
Require a defined contribution retirement plan for future postal employees
Provide instructions to arbitrators to consider USPS’s financial condition in interest arbitration awards
Reform workers’ compensation