USPS Proposes 8.7% Rate Hike; Seeks 7.3% Increase for Catalogs

Washington—With an emphasis on damage control, the U.S. Postal Service Board of Governors (BOG) on Sept. 11 proposed an 8.7% rate hike that could be enacted as early as July or August 2002. In making the announcement following its monthly meeting, the BOG emphasized that the proposed increase is more than 5% less than initial predictions of 10%-15%, due to an aggressive cost-cutting and personnel reduction program. On Sept. 7, Postmaster General Jack Potter announced that the USPS would cut 800 positions at USPS headquarters here.

Among the various rate classes, standard mail, the classification by which most catalogs are sent, would increase 7.3% on average, bulk rate parcels 9%, Priority Mail 13.5%, magazines 10%, and Express Mail 9.7%. The first class stamp is proposed to jump 3 cents, or 8.8%.

The rate case will be filed with the Postal Rate Commission (PRC) later this month. After the required 10 months of hearings before the PRC concerning the proposal, the PRC will render a “recommended decision” to the USPS. Shortly thereafter, the BOG will have the authority to implement the rates, delay implementation, or possibly reject the PRC decision.

“We simply don’t have the basic tools necessary to operate in a modern business-like manner,” said BOG chairman Robert Rider in announcing the rate proposal. “We will continue to manage this institution with the 30-year-old laws that govern us, but it’s like trying to listen to a CD on an eight-track player,” he added, referring to the need to overhaul the 1970 Postal Reorganization Act. The USPS is expected to end its fiscal year on Sept. 30 with a $1.65 billion deficit.

In making his statement on the rate request, Potter said that the agency is aiming to chop $2.5 billion in costs out of the system through 2003, and that further studies of consolidating mail processing operations will continue.

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