House Approves Budget Resolution

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The House of Representatives on Friday approved its budget resolution that allows for the effect of HR 735, which would lower U.S. Postal Service pension contributions and potentially keep rates steady until 2006.

The bill has also been included in the Senate budget resolution. As of yesterday afternoon, the Senate was still debating its resolution.

Differences between the House and Senate budget plans will be resolved in reconciliation. Congress is scheduled to vote on the resolution April 15, but in recent years, the date has become less and less strict. In addition, the war in Iraq could significantly effect or delay the budget reconciliation process.

"The enormous cost of the war could significantly affect the budget reconciliation process," said Bob McLean, executive director, Mailer's Council.

Now that the House has approved the budget resolution that allows for the bill, Rep. Tom Davis III (R-VA), Chairman of the House Government Reform Committee, can bring the bill to the House floor for a vote. Insiders said it could be brought to the floor sometime this week.

The bill, which unanimously moved out of the House Government Reform Committee this month, requires the USPS to use some of the savings to pay down its $11 billion debt in fiscal years 2003, 2004 and 2005. Other savings would be used to continue funding retiree health benefits and hold postal rates steady until 2006.

The move to reduce contributions came after reviews by the federal Office of Personnel Management and the General Accounting Office found that the USPS was paying too much into the Civil Service Retirement System. Pension contributions are fixed by law and cannot be changed without congressional approval. The postal service estimates it would save $2.9 billion in fiscal year 2003 and $2.8 billion in FY 2004 through lower contributions. Quick passage is important because the postal service has said it will file a rate case this year if pension contributions are not lowered. Postal officials would not comment on when they plan to file, but insiders said it likely would come in August and would not include provisions for phased rates.

Meanwhile, In a letter dated March 21 to Rep. Tom Davis (R-VA), USPS Postmaster General John E. Potter said that while the agency is extremely pleased that both the House and Senate have moved quickly to introduce The Postal Service Civil Service Retirement Reform Act of 2003, it does have concerns with a provision in the House bill that provides for the establishment of an escrow account for accrued savings attributable to any fiscal year after 2005.

Under those provisions, beginning in 2006 the USPS would be required to pay into an escrow account the amount of "Savings" calculated by OPM. The USPS would then be unable to use those funds until a report prepared by the USPS had been evaluated by the GAO, approved by Congress and subsequent legislation enacted. This "compounds the complexity of planning future USPS revenue requirements and rate offerings," Potter said.

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