The Board of Governors of the cash-strapped U.S. Postal Service early next month reportedly plans to override the recommendations of the Postal Rate Commission and order postage rates increased by 3% as of July 1, industry sources told DIRECT Newsline.
It would mark the first time in recent memory that postal governors voted to override the PRC's recommendations and the second increase in postage rates this year.
Neal Denton, Alliance of Nonprofit Mailers executive director, blasted both postal governors and top postal officials for "not warning us that we could be seeing a rate increase as early as July." He called it "a horrible way" for the USPS to treat its best customers.
Lee Cassidy, executive director of the Direct Marketing Association's Nonprofit Federation, said that a second rate increase in six months, no matter how small, would have a devastating effect on mailers who developed their budgets for the year based on a 4.6% rate hike.
There was no immediate comment from the BOG or top postal officials who are planning to ask the PRC to support another rate hike, ranging from 10% to 20% for some time in 2002.
Sources said postal governors, stung by the PRC's persistent refusal to endorse a proposed 6% rate hike, will order the increase to keep the USPS from ending its fiscal year in September with a $2 billion to $3 billion loss. Postal officials blame the projected loss on the PRC's recommendation for the 4.6% rate increase that went into effect last January.
Under the 1970 law transforming the old Post Office Department into the quasi-governmental USPS, its board of governors can override the PRC's recommendations by unanimous vote if it feels the postal service's financial viability is threatened.
