29-Cent Stamp Gets OK From Postal Panel

The U.S. Postal Rate Commission agreed Friday to boost the cost of mailing a first-class letter to 29 cents, a 4-cent increase, clearing the way for higher rates to go into effect next month.

The independent commission pared a penny off a 30-cent rate requested last March by the U.S. Postal Service. It also authorized use of a 27-cent stamp on most envelopes provided by utilities, department stores, insurance companies and similar firms for paying bills.

Postal Rate Commission Chairman George W. Haley said the rate hike, the first since 1988, is designed to impose a heavier burden on third-class “junk” mailers, reversing the trend of rate increases in recent years.

Compared with the 16% rate hike on first-class mail, the commission approved increases of 25% on third-class or bulk mail, 22% on second-class items such as newspapers and magazines, 15% on express mail and 19% on priority mail.

“The most important part of this is our effort to restore an equitable balance between the two biggest classes of mail--first and third class,” Haley said at a news briefing. “There has been a trend toward increasing the burden on first class and lessening it on third class. We have tried to arrest that trend.”

It was the second time in a row that the commission has increased third-class rates by a greater percentage than first class, he said.

The rate for postcards, now 15 cents, is scheduled to rise to 19 cents--also a penny lower than the Postal Service had requested.

Although the Postal Service’s board of governors has the power to reject recommendations of the commission, whose members are appointed by the President, it has done so only once in the past 10 years. The commission’s advice is usually accepted by the Postal Service, and both Haley and Postmaster General Anthony M. Frank said they thought Friday’s proposal would be no exception.

Frank, who said he expected that the higher rates would go into effect on Feb. 3, ridiculed the commission’s decision to settle for 29 cents, calling it “a kind of populist push (that) saves the average family $2 a year.”

He also criticized as confusing the proposed 27-cent discount rate for consumers who use business-reply envelopes for paying bills. Such courtesy envelopes use bar codes and a ZIP code with an extra four digits to make processing easier.

Haley said the commission adopted this feature to allow consumers to share in the benefits of cost-saving advances in automation, as business users have done. He denied that purchasing 27-cent and 29-cent stamps would be awkward, noting that most consumers make bulk purchases in round numbers.

Haley estimated the new rates would produce additional revenue of $6.2 billion annually, bringing Postal Service income in fiscal 1992 to $48 billion. The commission is required by law to allow the Postal Service to break even on expenses, he said.

Besides its determination that too much of the rate burden had been shifted to first-class mail users, the commission decided that the Postal Service’s $1.6-billion contingency fund, used partly to recover actual losses from past years, was too big, Haley said.

Asked why the commission had not attempted to cut Postal Service operating costs instead of raising rates, Haley replied: “We on the commission are not managers. We are not in a position to micromanage the agency.”

Haley said he did not expect the Postal Service to reject the 29-cent rate or put it into effect under protest while asking the commission to reconsider. ‘We don’t think that will happen,” he said, noting that he had spoken with Frank.

The last time the commission altered a Postal Service request came a decade ago, when commissioners approved an 18-cent stamp instead of the requested 20 cents. The postage rate eventually rose to 20 cents that year, but in two steps.

Frank denied the frequently heard criticism that the Postal Service is poorly managed, saying the rate hikes are needed to cover higher labor costs that account for 83% of the agency’s annual budget.

“We raise our rates every three years,” he said. “Most companies raise their rates every year. We’re subject to inflation.”

Consumer groups applauded the decision to shift more of the burden from first-class mail users to bulk business mailers, but called on the Postal Service to hold down costs instead of continuing to raise rates.

Consumer advocate Ralph Nader, while commending the rate commission for not “rubber-stamping” the Postal Service’s requested rate hike, said he was “very disappointed that it did not go further and reject any increase above the current 25-cent rate.”

He complained that the Postal Service is “riddled with mismanagement, waste, poor service and poor customer relations, and does not deserve an increase.”

Tracey Schreft, an associate director of the U.S. Chamber of Commerce, said the commission had “dealt another blow to the American public and the nation’s business community” with the rate increases.

Schreft said the commission’s effort to shift the burden away from residential users will not work because businesses will pass their higher costs on to consumers.

“What was not mentioned was that the larger-than-requested increases in other (business) classes of mail ultimately will be paid for by the consumer,” Schreft said, adding that “many smaller companies will be forced out of business.”

POSTAGE INCREASES

Highlights of postal rate increases requested by the U.S. Postal Service and those recommended by the independent Postal Rate Commission.

Postal Rate Service Commission Class Now Request Proposal First Class 1 oz. letter 25 30 29 Special reply envelope -- -- 27 Postcards 15 20 19

LOOKING BACK

First-class postal rates have been figured on a per-ounce basis since July 1, 1885, when it cost 2 cents to mail a one-ounce letter. Since then, the rates have been:

Date changed In cents Nov. 3, 1917 3 July 1, 1919 2 July 6, 1932 3 Aug. 1, 1958 4 Jan. 7, 1963 5 Jan. 7, 1968 6 May 16, 1971 8 March 2, 1974 10 Dec. 31, 1975 13 May 29, 1978 15 March 22, 1981 18 Nov. 1, 1981 20 Feb. 17, 1985 22 April 3, 1988 25

AP/Los Angeles Times