Sen. Susan Collins, R-ME, chairwoman of the Senate Homeland Security and Governmental Affairs Committee, sent a letter Monday to Budget Committee leaders urging them to craft their resolutions to allow for “meaningful postal reform,” as outlined in legislation she is expected to introduce Thursday.
The letter also was signed by the bill's lead Democratic sponsor, Sen. Thomas Carper of Delaware.
Collins' letter indicated that the U.S. Postal Service should be given access to money slated for a retirement escrow account the USPS claims is overfunded.
In the letter to Senate Budget Committee chairman Judd Gregg, R-NH, and ranking minority member Kent Conrad, D-ND, Collins and Carper said: “Failure to repeal the [escrow] provision will directly impact the postal service's rate planning and will trigger annual rate increases, over and above any rate increases needed to fund postal operations.”
A postal official said the USPS will file for a rate increase this month only because it must cover a $3.1 billion escrow requirement resulting from changes set forth in the Postal Civil Service Retirement System Funding Reform Act of 2003. Many in the mailing industry expect a 6 percent across-the-board rate case to be filed, with implementation Jan. 1.
The Bush administration, however, has a different idea for the escrow account. In the president's $2.5 trillion fiscal year 2006 budget proposal announced in February, the administration suggested that it wants the USPS to use the money in the escrow account to pay down future retiree healthcare liabilities.
But according to the senators, the Senate postal reform bill will address retiree health benefits. This bill will differ from legislation introduced by Collins and Carper that was unanimously approved in the last Congress by the Governmental Affairs Committee because it will require the USPS to make payments into a new Postal Service Retiree Health Benefits Fund starting in 2006, rather than in 2007, as was proposed by last year's bill.
“The soon-to-be-reintroduced bill will reflect the need to balance the pre-funding of retiree health benefits with the ability of the mailing community to withstand continued rate increases,” Collins and Carper wrote. “This bill will propose to use the escrow funds to pre-fund post-retirement health benefit obligations; to pay down any outstanding debt to the Treasury; and to hold down operating expenses — thereby holding down rate increases as well.”
The senators anticipate that their postal reform bill will remove several billion dollars from the federal deficit in the first year following its enactment.
The Congressional Budget Office had said last year's postal reform bill would cost the overall federal budget $9.6 billion from 2006 to 2010, with a first-year cost of about $5.4 billion. The cost was associated with the proposed repeal of an escrow account provision put into place by the 2003 act.
While industry insiders did not want to comment on the bill until it is introduced, in general they said the news from Collins and Carper is good because the bill eliminates the escrow account but addresses the need to pre-fund retiree healthcare.
“What [Collins] is trying to do is find a balance between the White House and the mailing community,” said a mailing industry insider who requested anonymity. “She is sending a sign to the White House that she is trying to find a compromise, which is essential. A compromise that keeps the White House in the room is essential.”
Industry insiders also said Collins plans a hearing on the bill in early April, and it may be marked up in mid-April.
Regarding work in the House, industry insiders said the House Committee on Government Reform most likely will be unable to complete work on postal reform before Congress takes a spring recess from March 21 until April 1. The House postal reform bill, H.R. 22, was reintroduced in January by Rep. John McHugh, R-NY. It requires the USPS to pre-fund its retiree health benefit obligations by 2043 using some, if not all, of the savings created by the CSRS.
Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters