1st-Class Stamp Likely to Cost 25 Cents in April

The cost of a first-class stamp will climb to 25 cents, probably by mid-April, under a plan proposed Friday in an attempt to offset an expected $5.1-billion deficit at the U.S. Postal Service.

The 3-cent increase for first-class mail, recommended by the independent Postal Rate Commission and expected to gain approval easily, is part of an overall rate hike of 17.5% on all types of mail.

Hardest hit by the plan will be direct-mail advertisers, who analysts say may have to alter their marketing strategies to compensate for a 25% jump in third-class bulk mail rates.

Because the Postal Service is losing money every day, the overseeing Board of Governors may rush adoption of the new rates, starting them as early as April 17, officials said.

Board to Consider Plan

The board will begin considering the new plan Monday in closed session. The presidentially appointed governors consider recommendations by the Postal Commission, an independent body created by Congress, but have final say on any rate hike.

Under the rate schedule worked out over the last 10 months by the Postal Commission, costs for first-class mail less than an ounce, expected to make up more than half the 161 billion items mailed this year, will increase 13.6% to 25 cents.

Other rate increases will be 7% to 15 cents for postcards; 1.9% to $12.48 for express mail; 18.1% to 17 cents for second-class regular mail, such as magazines and newspapers; 24.9% to 13 cents for third-class bulk, the second-biggest class; and 14.8% to $3.27 for parcel post.

The commission’s rate recommendations jibe closely with the Postal Service’s own requests--more so than in past years--and are expected to meet with quick approval, said one source close to the Board of Governors.

Postal Commissioner Henry Folson suggested that the governors “will put the rate plan in effect as soon as they can because they’re hurting.”

Without the rate increase, the Postal Service would face an estimated $5.1-billion deficit, officials said. The commission cited underestimated costs of a new labor agreement, health care and cost-of-living adjustments, and “the failure of the fiscal year 1987 cost-cutting programs” as factors in that deficit.

Budget cuts ordered by the White House and Congress forced the Postal Service last month to begin shutting offices around the country for half a day each week.

The last rate hike took effect February, 1985, as first-class stamps rose from 20 cents to the current 22 cents. For years, postal officials have hoped to limit rate hikes to once every five years but have generally been forced by red ink to speed up that cycle.

Proposes Legislation

Rep. William D. Ford (D-Mich.), chairman of the House Post Office and Civil Service Committee, said he will introduce legislation to take the Postal Service “off-budget,” separating its revenues from the federal government and shielding it from potential cutbacks.

The rate commission did offer the prospect of some good news for the average mail user: a potential break at bill-paying time. The panel proposed an unspecified discount on mailing pre-printed courtesy reply envelopes to banks, utilities and other businesses and bill collectors.

While such mail is now charged at the regular first-class rate, the pre-addressed correspondence ends up saving the Postal Service “in excess of a nickel apiece” because it is easier to process and deliver, Chairwoman Janet D. Steiger said. The proposed discount needs more study, however, and will not go into effect with the rate hike, officials said.

Publishers Worried

Chapin Carpenter, senior vice president at the Magazine Publisher Assn., said publishers are worried by the frequency of rate hikes, a cost that they in turn pass on to advertisers and subscribers.

“We’re disappointed. Any increase is painful,” Carpenter said. “This one is in the ballpark, but I’m worried where we’re headed in the future.”

John Jay Daly, a postal consultant to all types of mail users, said direct-mail advertisers “took quite a whack” in the rate schedule--a 25% increase--and are already making plans to “refine their mailing lists, to narrow them down to those people who are more likely to buy.”