Post office seeks higher stamp prices

April 09, 2005|By Sara Clarke | Sara Clarke,LOS ANGELES TIMES

WASHINGTON - After nearly three years of the 37-cent first-class stamp, the Postal Service asked yesterday for a 2-cent increase - but said it hoped Congress would pass legislation enabling it to withdraw the request.

The increase, which would bring the cost of a first-class stamp to 39 cents, would be part of a 5.4 percent across-the-board increase in postage rates.

The main reason, the Postal Service said, is not the cost of business, but the cost of a congressional requirement.

In 2003, Congress reduced the amount of money the Postal Service pays into its pension fund after auditors discovered the agency would be contributing too much in the future. The money was directed instead toward paying off the Postal Service's debt for three years, and then into an escrow account.

Current rates won't allow the Postal Service to generate the $3.1 billion that it must put into the escrow account next year, said Jim Quirk, a spokesman for the service.

"It was a pay-as-you-go system," Quirk said. "It wasn't intended ... for ratepayers to pay for a savings account."

Legislation to eliminate the escrow requirement is being considered by House and Senate committees. If it passes, the Postal Service will not need to raise rates until 2007.

The request for a rate increase highlights the need to streamline the Postal Service's business practices, said Bill Ghent, a spokesman for Sen. Thomas R. Carper, a Delaware Democrat. He added that congressional efforts last year were thwarted by insufficient cooperation from the White House.

The request for a rate increase will be considered by the Postal Rate Commission in a process that usually takes 10 months. The Postal Service, which said it needs the rate increase in early January, asked for expedited hearings.

"We will speed it up as much as we can," said Stephen Sharfman, general counsel for the rate commission. "It depends on the extent and complexity of the issues raised by the public."

The Postal Service, which is prohibited from making a profit, has been facing financial problems as technology such as the Internet has cut into the use of standard mail. The service is delivering fewer pieces of mail to more addresses, stretching resources.

Some organizations suggest eliminating the agency's monopoly on standard mail and letting private entities compete.

"The rate increase still does not address the structural weaknesses of the Postal Service," said Leslie Paige, of Citizens Against Government Waste. Paige said the Postal Service needed competition, or at least better regulation, because out-of-whack accounting and ventures into nonpostal activities made the system inefficient.

Under the Postal Service's petition to the Postal Rate Commission, a first-class letter would cost 39 cents for the first ounce and 24 cents, up a penny, for each additional ounce. The cost of a postcard would also rise from 23 to 24 cents.

The Los Angeles Times is a Tribune Publishing newspaper.

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