Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 6, 1990 TAG: 9003062165
SECTION: NATIONAL/INTERNATIONAL PAGE: A/1 EDITION: EVENING
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
With a record $1.6 billion loss looming in this fiscal year, Postmaster General Anthony Frank says the increase is necessary.
He proposed increases today in all classes of mail, with the charge for first class likely to go from a quarter to 30 cents next year. That would be somewhat more than the rate of inflation, says Frank, who promises to hold down postal service spending in coming years.
Unlike a store manager, however, Frank can't simply slap a new price tag on the goods.
The proposal must go to the independent Postal Rate Commission, which has 10 months to consider the request, hold hearings and issue a report.
If the commission agrees, rates can go up. If not, it's back to the drawing board unless the postal service board of governors votes unanimously to overrule the commission.
Any rate increase would not occur before early 1991. But even though the process is only beginning, sides are being chosen for the battle.
Vincent Sombrotto, head of the 315,000-member National Association of Letter Carriers, contends that stamps today are cheaper than they were in 1971, if inflation is taken into account.
Sombrotto held a news conference Monday to defend the rate increase and to denounce critics of the post office, who have called for private business to be allowed to compete in mail delivery.
James Miller, who was federal budget director under President Reagan, is spearheading the campaign in favor of private competition. And consumer advocate Ralph Nader is trying to organize opposition to the proposed rate increase.
While first-class mail rates attract the most public attention, new charges would cover all classes of mail. Groups representing magazines, newspapers, advertisers and other large mailers will be intensely interested in the proposals.
Postal charges last increased in 1988. Frank has said he hopes to have only one more price rise in this century.
When the old Post Office Department was converted into the U.S. Postal Service in 1971, it was directed to operate like a business and break even over the long haul. The massive tax subsidy that had been used to hold down postage rates was phased out.
The postal service has posted five surplus years and five loss years in the the last decade, finishing 1989 about $61 million in the black. The agency had a $404 million surplus in the first quarter of 1990, but rising costs are expected to push it well into the red by the end of the year.
Postal officials anticipate a $1.6 billion loss this fiscal year, the largest ever for the agency.
Contracts with the four largest unions representing more than 800,000 postal workers also expire this year, and negotiations for new pacts are expected to lead to higher costs.
Even at 30 cents for a first-class letter, American postal rates will be the lowest in the industrialized world, officials say.
First-class rates are the equivalent of 30.7 cents in Australia and 32.5 cents in Canada. The rate amounts to 33.5 cents in Switzerland and 33.9 cents in Britain. It is the equivalent of 40.5 cents in France, 42.8 cents in Japan, 56.4 cents in Italy and 59.9 cents in West Germany.
by CNB