Postal Service governors reject latest plan, still want higher rates Board tells postal commission to reconsider February's decision.

July 03, 1991|By Journal of Commerce

WASHINGTON ...B — WASHINGTON -- The U.S. Postal Service's Board of Governors rejected a series of rate increases approved in February by the Postal Rate Commission yesterday, setting the stage for what could be another round of postal rate increases.

The vote by the nine-member board also reflects the ongoing conflict between the two agencies that determine what American consumers and businesses pay for postage.

The board acted after determining that the new rates, enacted Feb. 3, would not be sufficient to cover the Postal Service's costs.

Since that time, "mail volume and revenue have subsequently dropped far below plan," Norma Pace, board chairwoman, said in a statement.

Pace said although the board would have wanted to wrap up the rate case and move on to other business, "the revenue shortfall has mandated that we reject the case and send it back."

Under the new rate program,prices for Express Mail and Priority Mail rose 15 percent and 19 percent, respectively. Third-class and second-class postage climbed 25 percent and 22 percent, respectively, while parcel post rates rose 18 percent.

First-class postage increased from 25 cents to 29 cents.

A postal commission official disagreed with the board's view.

"We looked at it before and believed (the rates) would bring in enough revenue," said Jerry Cerasale, special assistant to the postal commission.

The board has returned its decision to the postal commission for further consideration. Under postal rules, the board may modify the current rate structure, but only after a unanimous vote.

It has been more than 10 years since the board changed its rates in defiance of the rate commission's recommendations.

In 1981, the board approved, among other things, a 20-cent first class stamp despite the rate commission's insistence that the rate remain at 18 cents.

"It's just another step in the process," said Bob Hoobing, a Postal Service spokesman, referring to the board's recent action.

This isn't the first time the board and the rate commission have sparred over this latest round of increases.

On Jan. 22, the board approved the increases under protest, and returned its decision to the rate commission hoping for a change of heart. The rate commission did nothing.

Postmaster General Anthony Frank said recently that total volumes in 1991 will decline for the first time in 15 years. He also projected a revenue shortfall of as much as $800 million in 1991.

Frank blamed the decline on negative public response to the rate increases. He also said the rate commission's actions prevent the Post Office from setting its own rates in response to market developments.

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