Postal Service, PRC at odds over postal reform bill

Apr 01, 1999 10:30 PM  By

In January, with the convening of the 106th Congress, Rep. John McHugh (R-NY) introduced a new version of his Postal Reform Act, now named the Postal Modernization Act (H.R. 22). Although at least two key parties-the Postal Service and the Postal Rate Commission (PRC)-are at odds over the bill, some observers are optimistic that it could be passed before the House of Representatives adjourns next year.

Originally introduced in 1996, H.R. 22 attempts to update 1970′s Postal Reorganization Act, which reinvented the USPS as a quasi-governmental agency. In February, the USPS proposed in testimony before the House Subcommittee on the Postal Service several changes to the bill. Among them, the USPS suggested that, through PRC approval, it be allowed to separate postal costs and revenue of competitive services such as parcel delivery from those of noncompetitive services such as first class mail, thus giving it greater pricing flexibility. “Pricing structures should be able to reflect the changing demands of the marketplace,” Postmaster General William Henderson said in his testimony, “while affording protection both for competition and for customers.”

Henderson also suggested that postal employees be eligible for productivity-related bonuses even if productivity were lower than the levels established in the bill, and he asked for a change in the proposed rate hike cap, allowing for above-inflation rate hikes on years that follow below-inflation rate increases. H.R. 22 limits rate increases to the change in the Consumer Price Index, adjusted to account for expected USPS productivity gains.

But in his testimony that followed, PRC chairman Ed Gleiman blasted the USPS suggestions, saying that they “subvert the purpose of postal modernization and reform legislation, and should be rejected.”

Gene Del Polito, president of the Advertising Mail Marketing Association, agrees with Gleiman on at least one count: “There has to be a [bonus linked to] productivity or the USPS won’t improve the efficiency of its services.”

Despite the bickering, Del Polito believes that the need for postal reform will force the subcommittee to carve out a version of the bill that will pass the House by the end of 2000. “Everyone who has a stake in the system agrees there has to be some reform; the question is how much,” he says.