DATE: Friday, April 11, 1997                TAG: 9704110555

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY BILL McALLISTER, THE WASHINGTON POST 

DATELINE: WASHINGTON                        LENGTH:   40 lines

34-CENT STAMP MAY BE ON THE WAY SOURCES SAY THE 2-CENT INCREASE WOULDN'T TAKE EFFECT UNTIL MID-1998.

The days of the 32-cent stamp are numbered - soon, it appears - to be replaced by a 34-cent stamp.

Sources say senior postal management has agreed that the U.S. Postal Service must seek an increase in the price of the first-class stamp and that Postmaster General Marvin T. Runyon has endorsed the idea.

Until recently, Runyon has sought to hold the price of a stamp at 32 cents until the year 2000. But, facing a projected $1.3 billion deficit in 1998 and after a briefing by top postal managers last week, the postmaster general changed his view.

Many postal officials now expect that the agency will initiate proceedings to raise the price of a first-class stamp to 34 cents.

The increase would not become effective until mid-1998.

Even with a 34-cent stamp, Runyon will be able to claim a victory of sorts. Soon after arriving at postal headquarters in 1992, Runyon blocked the agency from proposing a 35-cent stamp - a rate that some postal executives wanted to impose in 1995.

Instead, Runyon has effectively changed what historically has been a three-year rate increase cycle. Under that cycle, the Postal Service would make a profit the first year of higher stamp prices, break even the second and then post a deficit in the third year.

``The days of the roller-coaster financial ride are over,'' a senior postal official said Thursday. What that means, the official said, is that it is likely the agency will seek smaller but more frequent rate increases in the future.

Thanks in part to what one spokesman called Runyon's ``heroic'' strict cost-control budgeting, the agency has posted record profits of more than $3 billion in the past two years and is headed for a record third profitable year. But with the agency projecting a profit of $500 million or more this year, some mailers are likely to contest the new stamp increase.

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