By
The Associated Press
WASHINGTON - Just a month after higher stamp prices took effect, the U.S. Postal Service, facing massive losses, is considering another rate boost that could result in higher prices.
The post office is reportedly facing losses of up to $2 billion this year despite the price increase that took effect Jan. 7, which included raising a first-class stamp a penny to 34 cents.
While approving that increase, the independent Postal Rate Commission rejected or scaled back several other requested price hikes, cutting expected income by some $1 billion. At the same time, mail volume has dropped because of the poor economy, further reducing anticipated income.
The postal board of governors ordered the agency's management yesterday "to begin preparing a rate case as soon as possible to ensure the continued financial viability of the Postal Service," board Chairman Robert F. Rider said after a board meeting in San Antonio, Texas.
Rider's statement said the governors "unanimously voiced disappointment" at the commission action and noted the board asked the independent commission to reconsider.
The postal governors can overrule the commission and institute higher rates on their own, but only if they vote unanimously to do so. Senior officials could not be reached for comment on whether the governors may try to overrule the commission.
In addition to preparing to file a request for another rate increase, Rider said the board had ordered management to review all programs and projects, curtail or eliminate all nonessential activities and evaluate the Postal Service's long-term ratemaking needs.
He said the agency will cut capital spending this fiscal year from $3.6 billion to $2.6 billion.
The complex process of increasing postal rates can take nearly a year, and postal officials have long criticized delays that prevent them from responding quickly to market pressures and competitors' price changes.
Given the increasing competition from electronic communications, the ability to change postal prices quickly has become vital, agency officials say, and they hope Congress will change the law governing their operation.
The agency is also facing a decline in volume.
Standard A mail volume, which consists largely of advertising, increased during the most recent reporting period, but volumes in most other major areas declined, the agency said. First-class and Priority Mail have been adversely affected by the economic downturn, officials said.
The Postal Service receives no tax revenue for its operations, but it is still a government agency operating under laws set by Congress.
