Potter To Congress: We Need More Funding
The postal service will need $762 million this year -- $87 million more than it has already received -- and $1.7 billion over two years, Potter told members of the subcommittee on treasury, postal service and government.
"These are costs related to the postal service's role in enhancing homeland security," he said. "They should not be borne by ratepayers."
The USPS received $175 million from the White House for postal security soon after the Sept. 11 terrorist attacks and another $500 million as part of the $318 billion defense appropriations bill signed in January by President Bush.
Potter said the USPS faces a loss of more than $2 billion this year as mail volume lags and costs of sanitizing the mail and cleanup of contaminated offices continue to mount.
Potter said that for the first two quarters of this year, mail volume is down 4 billion items, with the biggest drop in advertising mail, followed by First-Class mail. Also, he said the agency spent an additional $150 million on transportation costs because of federal rules prohibiting the sending of anything heavier than 16 ounces on commercial airlines for security reasons.
He said he hoped the Postal Rate Commission would put its stamp of approval on the current rate case proposal so higher prices could be instituted this summer rather than later in the fall, as originally planned. If not, Potter said, the losses could rise to $3 billion or more.
Potter's remarks follow up on an emergency preparedness plan the USPS presented to Congress this month detailing how it planned to spend the $500 million appropriation. The plan also expressed a need for the added $87 million.
The agency said in the plan that it is emphasizing prevention, detection and risk reduction at the earliest point feasible in its distribution network.
It plans to use a technology called polymerase chain reaction, for example, to detect anthrax spores and other biohazards in the mail. The technology is being tested for adaptation to high-speed postal sorters, but the postal service plans to sign a $200 million contract by September to install the PCR systems at 292 facilities nationally. The agency is working with two firms that have developed PCR prototypes.
The USPS also plans to spend $245 million to retrofit its high-speed sorters with a system that will vacuum air near the mail and feed it through a filter to capture any harmful bacteria.
About $35 million will be used to decontaminate and reopen two major sorting and distribution facilities -- Brentwood in Washington and Hamilton Township in Trenton, NJ -- that were shut down last fall following the discovery of anthrax-contaminated mail. The USPS does not know when the facilities would reopen, but insiders said it would be within two months.
Potter also asked the House panel for more than $900 million, the remaining balance due the USPS under the Revenue Forgone Reform Act of 1993. The act granted the postal service 42 annual payments of $29 million to compensate for insufficient funds appropriated in previous years. Potter requested the entire remaining amount rather than the yearly payments, saying the money was needed now.
"By fully paying the postal service for its current and past services in this area, Congress will support the viability of our national mail system during an extremely difficult financial time," he said.
Reportedly, however, House lawmakers raised concern that as the USPS struggles amid a slumping economy, dwindling mail volume and unexpected costs tied to the purchase of equipment to protect mail from future anthrax attacks, money is being spent to reward 82,000 high-ranking employees in the agency.
Last year, the USPS spent $170 million as part of a "pay for performance" program that rewards employees for boosting performance and safety regardless of the agency's financial performance.
"I need to bring up directly the major challenge that this subcommittee has in deciding postal service requests, and frankly it's a credibility issue," said subcommittee chairman Rep. Ernest Istook, R-OK.
Potter said he stood by the controversial employee bonus program. He estimated the USPS has saved about $1 billion in the past three years compared with its old bonus system.