Postal Service to hike rates 9 percent

Published 9:00 pm Tuesday, September 11, 2001

Associated Press

WASHINGTON — The cost of mailing a letter will go up again next year, jumping 3 cents to 37 cents.

Citing a looming $1.65 billion deficit, the U.S. Postal Service announced Tuesday it will seek rate increases averaging about 9 percent, including the boost for personal letters.

"The fact is, our options are limited," said Robert Rider, chairman of the agency’s board of governors. "We must take the necessary action today."

Rider said the decision by the governing board was unanimous.

The current 34-cent mail rate took effect in January, along with increases in many other classes of mail. Another boost in some rates kicked in July 1.

Nonetheless, rising costs for fuel, labor and health care threaten more red ink for the agency, officials said. Currently, the post office is in labor negotiations with unions representing about 700,000 workers.

"We do not intend to mortgage the future of the Postal Service," Rider said of the need to raise money to balance the budget.

Earlier, managers ordered a freeze on new construction and cut back on overtime and other costs, trimming the Postal Service’s deficit from $3 billion to an estimated $1.65 billion. A cut in headquarters managerial staff of 800 positions was announced last week, with another 500 positions scheduled to be eliminated in field offices.

The increase in first-class stamps will be accompanied by increases in other types of mail as well: first class, up 8.2 percent; Express Mail, 9.7 percent; Priority Mail, 13.5 percent; periodicals, 10 percent; advertising mail, 7.3 percent; and packages, 8.9 percent.

The Postal Service, although a part of the federal government, does not receive tax money for its operations. It is required to pay its own expenses from fees changed for moving the mail and to break even over time.

Postmaster General Jack Potter said that because of the continuing financial problems, the construction freeze will remain in place and that management will be looking for further ways to cut costs.

Raising postal rates is a complex process. The agency’s request for an increase is submitted to the independent Postal Rate Commission, which holds hearings and has 10 months to rule on the rate request and possibly change it.

Only after that ruling can the Postal Service impose the higher rates. The lengthy process means a rate request filed this month would unlikely to take effect before late summer or autumn of 2002.

The Mailers Council, a trade group that represents high-volume shippers, predicted the new increases are unlikely to boost postal revenues because they will most likely result in a decline in the amount of mail.

"In the private sector, ailing companies … are cutting their prices in response to declining sales and revenues. The Postal Service has apparently decided to take a different approach," the council said in a statement.

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