Mailers More Wary of ’06 Postal Hikes
(Direct Newsline)— groups pretty much expected the Postal Rate Commission’s recommended decision Wednesday to raise postal rates, even though the PRC proposed raising some rates more than the 5.4% the U.S. Postal Service asked for. Final judgment from the USPS Board of Governors is due later this year.
Overall, the PRC proposed the following rate increases:
- First-Class Mail—5.2% (overall)
- Standard Mail Regular—5.4% (overall)
- Enhanced Carrier Route—5.5% (overall)
- Nonprofit Regular—3% (overall)
- Nonprofit Enhanced Carrier Route—12.3% (overall)
- Priority Mail—5.4% (overall)
- Express Mail—5.5% (overall)
- Parcel—7.3% (overall)
- Periodicals within County—2.3% (overall)
- Other Periodicals—5.5% (overall)
But mailers were more concerned about what further increases the USPS might propose next year. Those proposals will probably include changes in mail classification and the way the USPS attributes costs, said Gene Del Polito, president of the Association for Postal Commerce.
Separately, at least one industry observer was unsure about the long-term prospects of postal reform legislation that’s now pending in Congress, which could presumably free the USPS from having to pay billions of dollars to cover civil service and military pension obligations of former postal employees.
“The PRC’s decision was fair, just and legally sound,” said Neal Denton, executive director of the Alliance of Nonprofit Mailers.
Denton noted that nonprofit standard mail will see significant benefits as a result of the exception and Nonprofit Enhanced Carrier Route Mail (ECR) will see significant increases over the 5.4% across-the-board rates. But overall, nonprofit mailers will pay approximately $16.1 million less than requested by the postal service, assuming the USPS Board of Governors accepts this PRC recommendation.
“There were no surprises here,” said Bob McLean, executive director of the Mailers Council, who warned that the USPS is expected to file a much larger rate increase next year that will most likely affect most, if not all, classes and subclasses of mail.
“Considering that we will have gone three and a half years since the last rate increase, this recommendation represents relatively good news for most mailers,” said Jerry Cerasale, senior VP-government affairs at the Direct Marketing Association, in a statement. “Today’s recommendation is significant, considering the double-digit increases that were discussed prior to the filing of this rate case last April.”
In particular, the DMA Nonprofit Federation (DMANF) expressed concern about the proposed double-digit rate hike for enhanced carrier route (ECR) nonprofit mailings.
“While we understand that the Commission felt constrained by statutory requirements, that does not alleviate the pain of a 12.3% increase for nonprofits that are working so hard to keep overhead costs to a minimum,” said DMANF executive director Senny Boone.
As previously reported, the USPS filed this rate case in order to raise money to cover pension obligations of former postal employees. In late 2002, the U.S. Office of Personnel Management discovered that the USPS had overpaid the federal Civil Service Retirement System fund by more than $70 billion. The industry lobbied Congress, which then passed a law, which transferred the payment obligations to the U.S. Treasury but required that the USPS place the money it would have spent on those obligations into an escrow account. That law, P.L. 108-18 expired at the beginning of 2005 (Direct Newsline, April 8).
“This rate increase was precipitated to help the Postal Service meet a congressionally mandated escrow payment. It’s unfortunate that postal reform was not enacted in a timely manner, since either the Senate or House reform bill would have reduced this rate increase for all mailers.”
If reform does not pass during this Congress, “the postal service will be saddled with paying the escrow and military pension obligations for many years to come,” said McLean.
So where does postal reform legislation stand right now?
Last summer, the House passed its reform bill (H.R. 22) by a 410-20 margin and the Senate Government Affairs and Homeland Security Committee voted 15-1 to bring it to the full Senate. But stumbling blocks remain.
At deadline, Committee Chairwoman Susan Collins, (R-ME) and Sen. Christopher Bond, (R-MO) were trying to resolve discuss Bond’s hold on the bill. According to news reports, Bond was trying to persuade her to include language from the House version of the measure that would allow ratepayers to challenge individual rates, such as the price of first class mail, if they do not see them as “fair and equitable.”
McLean hoped these differences might get ironed out since Senate Majority Leader William Frist (R-TN) had taken an interest in resolving this dispute.
But the patience of even the most ardent postal reform supporters could wear thin.
“I think Senator Collins is pretty sick of this now and has other things she wants to do,” said Del Polito, warning that if postal reform dies in this Congress, “we probably won’t see anything before the end of this administration in 2008.” stand right now?
