Postal Official Says Rates Should Stay Steady Until 2004

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With the U.S. Postal Service projecting a $600 million profit for the 2003 fiscal year, a postal official told DM News last week that the agency continues to expect no rate increase until at least 2004. But he added that there's little margin for error if the economy stumbles.

"While $600 million is a whale of a lot of money to you and I, it is less than 1 percent of our revenue stream," said Richard Strasser, USPS chief financial officer and executive vice president. "If the economic recovery stalls, significant negative impact to postal finances could result, especially if there is no recovery in advertising mail volume. We'll have to see as 2003 unfolds."

Mail volume is projected to grow 1.9 percent to 205.7 billion pieces in 2003, Strasser said, which is below volume for the 2000 fiscal year. He said mail volume remains threatened by e-mail and by strong competition for package business.

Final numbers for the 2002 fiscal year are expected at the end of the month, but the USPS expects to lose $1.2 billion. At one point in the fiscal year it was projecting a loss of as much as 4.5 billion.

The USPS said deficit reductions have come largely from staff reductions. The agency finished the fiscal year with 23,000 fewer career workers that a year ago and plans to cut another 12,000 positions next year. The USPS now has about 753,000 workers, down from 797,795 in 1999. Most of the cuts have been through attrition, and that remains the plan.

Another reason for the improved financial picture is the rate increase implemented June 30, which is expected to generate an estimated $4.1 billion in additional revenue through the end of the 2003 fiscal year.

Meanwhile, the Senate Committee on Governmental Affairs' subcommittee on international security and proliferation and federal service has scheduled a postal oversight hearing for Sept. 27.

Likely subjects are an update on the postal service's Transformation Plan, postal finances and efforts to deal with the effects of last year's anthrax attacks and planning to prevent and detect future attacks. Postmaster general John Potter and GAO comptroller general David Walker are expected to testify.

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