Bush signs law changing postal operations

Wednesday, December 20th 2006, 1:21 pm

By: News On 6

WASHINGTON (AP) New postal reform legislation that passed Congress calls for the first major changes in decades on how the post office works. Few Americans are likely to notice the difference.

While the measure affects the spending of billions of dollars, the mail will keep flowing, the letter carriers will keep making their rounds and the price of stamps, like just about everything else, will keep rising, but perhaps more slowly.

The bill was signed by President Bush on Wednesday.

The public will notice little immediate impact, Postmaster General John Potter said in an interview.

Over the long term, though, the measure can have a major impact on the finances of the Postal Service, perhaps delaying or reducing the amount of future rate increases, and assuring a firm basis for retiree health benefits.

One big change shifts responsibility for some retirement benefits from the post office to the treasury.

Many postal workers previously served in the military. Unlike other federal agencies, the post office was required to pay for retirement benefits earned during both military and postal careers of those workers.

The post office will still be responsible for their retirement costs for the time they worked for them, but benefits earned during military service will now be charged to Treasury, relieving the post office of having to pay billions of dollars over coming decades.

That, Potter said, will mean improved financial stability, a benefit for the post office, the public and large mail users because of rate increases that will most likely be less than they otherwise might have been.

In a second major change, a requirement that the post office place around $3 billion annually in an escrow account is ended. The law requires the agency to use that money to fund retiree medical benefits for 10 years. After that the funds may be available for other uses.

If anyone is considering applying for the job of postmaster general, 2016 would be a good time to start, Potter joked.

It was that escrow requirement that pushed the post office into the red last year, forcing it to raise the price of a first-class stamp by two cents in January.

Another increase, 3 cents this time, is pending and will probably take place next spring. The law won't change the need for that increase, Potter said.

Under the new law the post office can seek one more increase under its current pricing process within 18 months. After that the rate changing process would be simplified, but increases would be limited to the inflation rate.

That would make rate changes easier to plan for, something the large mailing industry has sought.

But it's a provision vehemently disliked by William Burrus, president of the American Postal Workers Union, who said the cap will have a devastating effect on employee wages and benefits.

"This limit on rate increases -- without regard to the actual costs the Postal Service incurs -- will result in an artificial cap on postal workers' wages," Burrus told his union members.

And Burrus called "insulting" a provision in the measure requiring a three-day wait before a worker can apply for compensation for on-the-job injuries.

William H. Young, president of the National Association of Letter Carriers, called passage of the measure "bittersweet."

He praised the bill for preserving union bargaining rights and helping the post office financially, but said the waiting period for injury compensation "really sticks in my craw."

"Frankly, it's insulting," Young said.

Burrus argues that the bill tilts too heavily toward the interests of large business mailers, a concern shared by consumer advocate Ralph Nader.

Nader and his associate, Christopher Shaw, last week released a book analyzing postal operations and urging establishment of a new postal consumer action group to represent the interests of the average consumer in mail matters.

The bill also will allow the post office to be more competitive in delivery of express mail and packages, easing the rate changing process for those items and permitting it to negotiate package deals with large mailers.