American to get three-year reprieve from stamp price increases

Tuesday, April 8th 2003, 12:00 am
By: News On 6

WASHINGTON (AP) _ Americans will get a three-year reprieve from higher postal rates under legislation that allows the Postal Service to save billions of dollars that would have otherwise gone into pension payments.

The bill, which would require the Postal Service to keep stamp prices at current levels until 2006, passed 424-0 by the House Tuesday and now goes to President Bush for his expected signature. The Senate passed the bill last week.

The legislation has strong support in the $900 billion mailing industry, which has suffered in recent years from the poor economy, lost volume, the anthrax scare, increased competition from online banking and other electronic communication, and public aversion to rising prices.

The price of a first-class stamp was raised to 37 cents last June, the fifth increase since 1991, when the rate jumped from 25 cents to 29 cents.

Mail advertising and parcel deliveries amounts to hundreds of billions of dollars in commerce every year, said Rep. John McHugh, R-N.Y., the bill's chief sponsor. The legislation ``certainly would go a long way toward boosting the economic activities of this nation as a whole.''

``This represents stable postal rates which we haven't seen for some time,'' said Neal Denton of the Alliance of Nonprofit Mailers, which represents churches, charities and other groups that use the mail to raise funds and disseminate information. ``This is tremendous news.''

The measure grew out of findings last year by the Office of Personnel Management that the Postal Service was paying billions of dollars too much into the Civil Service Retirement System, which covers workers who joined before 1984. The office estimated that the Postal Service would eventually overfund the retirement program by more than $70 billion.

The legislation allows the Postal Service to adjust its pension payments, with the condition that there be no rate increases until 2006 and that the savings be used to pay down the Postal Service's debts, which now stand at more than $11 billion. The savings can't be used to pay executive bonuses.

It is expected to result in savings of $2.9 billion this budget year and $2.6 billion next year.

The financial break comes as a presidential commission considers long-range changes to the money-losing agency. ``It helps to lay the foundation for systematic reforms that are so desperately needed in the nation's mailing system,'' said William L. Davis, head of R.R. Donnelley, which provides printing and related services to catalog merchandisers and newspaper, magazine, book and directory publishers.

Worker benefits will not be affected, and the legislation was welcomed by employee unions. ``We are very interested in seeing the Postal Service remain viable,'' said Drew Von Bergen of the National Association of Letter Carriers, which has 230,000 active members.

Gerry Kreienkamp, a spokesman for the Postal Service said they were gratified that the legislation was moving through Congress so rapidly. He said the post office, which suffered a $676 million loss last year, would have had to consider another rate hike next year without the legislative action.

Rep. Henry Waxman, D-Calif., proposed an amendment to remove language in the bill requiring the Postal Service to pay some $18 billion in pension costs related to the military service of postal employees covered by the pre-1984 program. But he then withdrew his amendment, citing White House opposition to it, settling instead for a study of whether the post office should be responsible for those benefits.