Officials of the financially ailing U.S. Postal Service are considering asking Congress for early payment of a $1 billion debt to help keep the service afloat without raising rates, sources have told DIRECT Newsline.
The debt stems from the Revenue Foregone Reform Act of 1993, abolishing the government’s annual payment to the USPS for processing free and reduced-rate mail.
Congress, acknowledging that that it never gave the USPS all the money it should have over the life of the 20-year old program, agreed to pay the USPS $29 million a year over a 42-year period.
Sources said that postal officials, facing the possibility of the USPS ending the current fiscal year with a deficit of between $2 billion and $3 billion, could submit a formal request for the payment to the House Government Reform Committee chaired by Rep. Dan Burton (R-IN) within 30 days.
There was no immediate comment from either postal officials or their Board of Governors, who are expected to take some action on a possible rate increase at their public meeting tomorrow.
Postal governors, stung by the Postal Rate Commission’s rejection of a proposed rate increase of 6% for a 4.6% hike, reportedly plan to override the PRC and authorize the USPS to raise all postage rates, except first class rates, by 1.4% on July 1.
Neal Denton, Alliance of Nonprofit Mailers executive director, called the request to Congress “a good idea and we support it.”
“I have said for some time that the postal service needs to present to Congress the bill for a lot of their unfounded mandates,” he said. Denton added that the USPS has never used its “statutory authority to request an appropriation to pay for all of its public service obligations.”
The Direct Marketing Association’s Federation of Nonprofits also endorsed the idea according to Lee Cassidy, executive director.
Congress could either pay the USPS outright under the Public Service Appropriations Act, or by simply increasing the postal service’s borrowing limit by the amount owed, Cassidy said. According to Cassidy, postal officials can get the money “without spending a penny” by simply telling the U.S. Treasury it is money that Congress owes.”
While there was no immediate comment from Burton, committee member Rep. John McHugh, (R-NY), who unsuccessfully has sponsored three postal reform bills in Congress over the last five years, urged the postal service’s Board of Governors not to increase rates.
“Raising rates now would worsen the competitive position of the postal service and cause substantial disruption to key customer segments with little or no minimal direct substitutes for postal services,” he said in a letter to BOG Chairman Robert F. Rider.
Noting that sometime in mid-summer the USPS plans to seek the PRC’s support to raise rates again next year by as much as 20%, McHugh added that “raising rates too soon may, in the long run, drive postal customers to increase their use of alternatives, thereby affecting mail volumes and revenues.”
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