- The Washington Times - Wednesday, February 7, 2001

The U.S. Postal Service is considering another postal-rate increase, one month after higher stamp prices went into effect.

The semi-independent federal agency expects to be facing a $2 billion loss at the close of the fiscal year in September.

The Postal Service's Board of Governors, which oversees the agency, has ordered it to prepare another rate-increase request "as soon as possible to ensure the continued financial viability of the Postal Service," Robert F. Rider, chairman of the Board of Governors, said in a statement.

That means customers using first-class mail could see another increase as soon as next year.

The rate change that took effect Jan. 7, which raised the price of a first-class stamp from 33 cents to 34 cents, was only part of the Postal Service's request. The independent Postal Rate Commission, which sets the rates, rejected or scaled back several other requested price increases made by the agency, cutting expected income by some $1 billion.

The Postal Service blames the anticipated loss on several factors including a slowing economy, less mail being delivered and increased costs.

"In addition to the adverse consequences of the [Postal Rate Commission] decision, the Postal Service continues to experience shrinking margins as costs rise more sharply than revenues," Mr. Rider said.

The post office had been in the black for several years, but the rate-increase request last year was made in anticipation of a small loss in 2000 and a larger one in 2001.

The agency finished fiscal 2000 with a $199 million loss. This year's rate increase will generate about $1 billion a year.

In addition to its growing costs, the amount of mail being delivered has dropped, too. The agency reported that volume fell in most of its core delivery categories, except for Standard A mail volume, which consists largely of advertising. First-class and Priority Mail have been adversely affected by the economic downturn, officials said.

The Board of Governors has also ordered the agency's management to review its programs and eliminate all "nonessential activities," as well as evaluate the Postal Service's rate-making needs over the next five years.

Mr. Rider said the agency will cut capital spending this fiscal year from $3.6 billion to $2.6 billion.

The board is also seeking changes in the nearly yearlong process it takes to increase postal rates. The agency claims the outdated process takes too long and doesn't allow for quick responses to changes in the market and competitors' prices.

Any change in the process will have to be approved by Congress.

The Postal Service is not funded by tax dollars, but is still a government agency operating under laws set by Congress.

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