WASHINGTON’S postal community has been abuzz with the rumor that the U.S. Postal Service is planning to file for another rate increase next year. Postal users are flabbergasted at the thought of a hike coming hard on the heels of another. But is the rumor true?
Those who read Washington’s postal tea leaves have interpreted recent statements by USPS CFO Richard Strasser as an indication that another rate case is imminent. Strasser told members of the Mailers Technical Advisory Committee that the postal service expected to complete fiscal 2001 with a net loss – even after it has implemented the new, higher rates from the 2000 rate case.
Well, depending on who you’re speaking to, the postal service’s financial picture for 2001 may not be all that dire. While it’s true the USPS may end fiscal 2001 somewhat in the red, a good chunk of that fiscal year already will have come and gone before the new rates are put into effect.
If you were to judge the postal service’s financial outlook based on the 2001 calendar year instead of the fiscal year, the USPS actually would complete 2001 with a bit of a surplus. In other words, there would be no emergent need for new revenue.
The only case the USPS could file on such short notice would be an across-the-board equal percentage increase similar to what it did in 1994. That proposal, however, came with the overwhelming endorsement of postal rate payers, since it was meant to give the USPS a quick financial shot in the arm and permit it to move ahead with its comprehensive mail classification case filed in 1995. I doubt seriously that such a repeat performance by the postal service would win anything approaching similar support.
I also don’t think the postal governors would relish the idea of back-to- back rate hikes. These are people who loathe anything that might trigger congressional disapproval.
In short, another rate increase doesn’t seem to be in the cards.
Network
