When the US House of Representatives passed the 2008 Financial Services and General Government Appropriations bill last month that eliminated a $29 million payment to the US Postal Service, Postmaster General John Potter’s and other mailers’ earlier fears were realized.
The debt stems from mail services the USPS provided for nonprofit mail in the ’90s.
The full House passed the bill on June 28 without the payment, despite urging from major mailing associations, the USPS and congressmen. As passed, the measure provides the USPS $88.9 million for free mail for the blind and overseas absentee voters, but the $29 million revenue from what’s known as forgone funding was not provided. Revenue is called forgone when Congress mandates that the agency provide free or reduced mail rates for certain mailers.
In a letter written last month to Rep. David R. Obey, chairman of the House Committee on Appropriations, Postmaster General John Potter said failure to fund the debt would have dire circumstances for the USPS and ratepayers.
“Failure to fund this authorized appropriation places the remaining funds owed the Postal Service, already deferred by interest-free installments over a total of 42 years, at risk,” Potter said in the letter. “According to generally accepted accounting principles under which the Postal Service operates, the Postal Service could be in the position of having to recognize the present value of the entire outstanding balance as a bad debt, with these costs being unfairly borne by current postage ratepayers.”
Under the Revenue Forgone Reform Act of 1993, Congress is required to reimburse the USPS $29 million annually through 2035 (42 years). The Revenue Forgone Act of 1993 authorized a total of $1.2 billion in payments.
“The bottom line is, the Postal Service is still owed $813 million, and if Congress fails to appropriate this money for two to three years…they [may] have to write off the money as bad debt, and all mailers would have to pay for the debt in rising postal costs,” said Anthony W. Conway, executive director of the Alliance of Nonprofit Mailers, Washington.
Conway said that for the past several years, Congress has tried to back out on payment. Another tactic they’ve used, he said, is to appropriate the money but not until the following fiscal year.
“For several years now, Congress has tried to squeeze some money, and for whatever reason, the $29 million payment always comes up as something to cut,” Conway said. “It ends up being resolved, however.”
Indeed, the issue has always been resolved in one of the bodies, either the House or the Senate.
An appropriations bill that covers USPS payments has not been introduced yet in the Senate. But, a bill will most likely be introduced shortly that may or may not include the appropriations. Then, the differences between the two bills will be resolved in a conference, and then the final bill will be passed on to be signed by the President.
Conway said that the Alliance is “is doing its share in terms of letting the hill know that it is very important that the Postal Service gets this funding. I think it behooves the entire mailing community to reach out to Congress and let them know that this is a debt that needs to be paid to the postal service, and that it will affect all mailers in terms of higher postage rates.”
The USPS remains hopeful that it will receive the payment.
“We are encouraged by mailers and all parties that have written to Congress in support of this ” said Mitch king, manager of government relations at the USPS. “We are encouraged by those efforts and we remain optimistic that we will get the money in this appropriations process. It is never over at the House action.”