Postal Service Rate: Stamp Cost Could Go Up 3 Cents If Proposal Passes

Wednesday, 25 Sep 2013 01:16 PM

By Newsmax Wires

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The U.S. Postal Service is seeking to raise the cost of stamps 3 cents, bringing the rate of a first-class stamp to 49 cents as the agency aims to make up for an immense budget shortfall.  

The reason for the proposed postage stamp increase, Chairman of the postal Board of Governors Mickey Barnett says, is the "precarious financial condition" of the agency and the uncertain prospects for postal overhaul legislation in Congress, according to The Associated Press.

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The Postal Service expects to lose $6 billion this year.

“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,” Barnett wrote customers.

Barnett said the rate increase, if approved, would generate $2 billion annually in revenue for the Postal Service.

The Postal Service stamp rate proposal must be approved by the independent Postal Regulatory Commission. If the commission accepts it, the increase would become effective Jan. 26.

Under federal law, the Postal Service 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.

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 a 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 ask for adjustment to bulk mail and package rates in a filing with the commission Thursday. No details were immediately provided.

Media and marketing businesses say a big increase in rates could hurt them and lower postal volume and revenues.

The agency last raised postage rates on Jan. 27, including a penny increase in the cost of first-class mail to 46 cents.

Congress is considering cost-cutting moves that include ending Saturday mail delivery and most door-to-door delivery. The agency says 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.

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 $5.6 billion payments last year, one deferred from the previous year, and is expected to miss another at the end of this month when its fiscal year ends.

Postmaster General Patrick Donahoe was to appear before a Senate panel on Thursday to press lawmakers for swift action on legislation to fix his agency’s finances.

Donahue has said that without help from Congress, the agency expects its multibillion-dollar annual losses to worsen. He has warned that the agency’s cash liquidity remains dangerously low.

The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control.

Even as it seeks a stamp rate increase, the Postal Service is studying whether stamps have any future at all, according to Reuters. The agency has hired a futurist, Faith Popcorn's BrainReserve, and is paying the group $565,769 to examine ways to stem the decline in stamp use, according to documents acquired by Federal Times, which provides news for federal managers.

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