Postal Appropriations on Hold, But Mailers Are Hopeful

Mailers are relieved that Congress passed a $388 billion fiscal year 2005 Omnibus Appropriations bill during last month's lame-duck session that includes nearly $600 million in funding for the U.S. Postal Service.

However, the legislation is being held up after lawmakers expressed concern over a provision that would give the chairs of the House and Senate Appropriations committees and their assistants the authority to access the income tax returns of any American. The Senate passed a resolution deleting the provision last month, while the House is likely to strip out the provision when lawmakers return to Washington today. Once fixed, President Bush is expected to sign the bill into law.

The postal service's rate increase in 2006 could have been much higher had the appropriations legislation not included postal funding. The omnibus bill includes language from S. 2806, the Senate Transportation, Treasury, and General Government Appropriations Act, includes $507 million for emergency preparedness, $61.7 million for free mail for the blind and overseas voting materials and $29 million as part of the Revenue Forgone Reform Act of 1993. This debt repayment would be the 12th of 42 payments on more than $1.2 billion owed to the USPS.

The earlier House bill and the Bush administration's budget plan included nothing for emergency preparedness and revenue forgone.

The legislation differs from what postmaster general John E. Potter asked for at a subcommittee hearing in February: $780 million for emergency preparedness, $29 million for revenue forgone and $75.9 million for free mail for the blind and overseas voting materials. Postal officials have said the $507 million will cover the postal service's prior-year emergency preparedness expenses. The USPS Board of Governors is scheduled to vote this week on its final fiscal year 2006 appropriations request.

If money had not appropriated, postal officials would have needed to increase rates even more in 2006. Kimberly Weaver, manager of government liaisons at the USPS, could not specify how the appropriated money will affect the increase.

“So many other [factors] come into play when the rate case is put together,” she said.

The amount of any rate increase still remains uncertain and is contingent greatly upon postal reform legislation that Congress failed to pass this year. That legislation would repeal a provision requiring that money owed to the USPS because of an overpayment into the Civil Service Retirement System fund be held in an escrow account. The repeal would free up $78 billion over 60 years, letting the postal service pay off debt to the U.S. Treasury, fund its healthcare liabilities and mitigate rate increases.

If that money isn't released, postal officials have said they will seek a double-digit rate increase for 2006. Some industry sources say the increase could be 12 percent for First-Class mailers, while Periodical publishers could face an increase of 18 percent to 22 percent. Direct mailers' increase would be somewhere in the middle.

The reform legislation also would return responsibility for funding CSRS pension benefits related to the military service of postal retirees — a $27 billion obligation — to the Treasury Department. No other federal agency has to make this payment.

One reason that postal reform failed to pass is because it lacked White House support. In a Nov. 10 memo to lawmakers, the administration stated, “Both the House and Senate bills fail to meet the president's reform principles.”

The mailing industry, however, still has hopes that the legislation will be reintroduced and passed next year.

Also in last month's lame-duck session, the Senate approved the nominations of James Miller III to serve on the USPS Board of Governors and Dawn A. Tisdale to serve on the Postal Rate Commission. Miller's term expires Dec. 8, 2010. Tisdale will serve on the PRC until November 2006.

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