Reform Act Update to Block 35% Nonprofit Rate Hike

The U.S. Postal Service has asked Congress to update the 1993 Revenue Foregone Reform Act to prevent enhanced carrier route rates for nonprofit Standard A (advertising) rates from going up by more than 35%.

Portions of the act–phasing out the government’s annual appropriation to cover the postal service’s costs of processing and handling free and reduced-rate mail–have outlived their usefulness and need to be updated, the USPS said.

The USPS proposed the following updates:

* that Standard A nonprofit periodical rates be 5% less than regular commercial rates

* that the preferred library rate be one cent below the commercial rate

* the inclusion of a provision in the rate making process that would allow nonprofit Standard A rates to be lowered when there is insufficient costing data

Without the changes, the USPS said nonprofit Standard A enhanced carrier route rates would go up by more than 35%. In addition, nonprofit periodicals mailers would be forced to pay higher rates than regular commercial rates and there would be a corresponding hike in Standard B library rates.

While the changes would result in smaller rate hikes for nonprofit mailers, and virtually no increase in nonprofit library rates, the USPS said commercial mailers would have to pay about $67 million in higher rates to make up the difference.

The USPS filed its request with the House postal subcommitte led by Rep. John McHugh (R-NY) shortly after filing the pending rate case with the Postal Rate Commission. In that case, the USPS seeks to boost postage rates next January by an average 6.4%, while raising nonprofit rates by as much as 20%.

A number of industry organizations have endorsed the proposed changes including the Alliance of Nonprofit Mailers, the National Federation of Nonprofits, the Association for Postal Commerce and the Direct Marketing Association.