USPS May Get Shortchanged

DMers will watch closely when Congress returns for a lame-duck session tomorrow, as the size of a U.S. Postal Service rate increase in 2006 could grow if postal funding is not included in appropriations legislation that could be passed in this session.

Congress likely will pass appropriations bills, including S. 2806, the Senate Transportation, Treasury, and General Government Appropriations Act, 2005, and HR 5025, the House Transportation, Treasury, and Independent Agencies Appropriations Act, 2005. Postal funding, if appropriated, would be in these two bills. The session is scheduled to adjourn Nov. 20.

The USPS has urged the House Appropriations Committee to include funding that does not currently appear in its appropriations bill or in the White House budget. The Senate appropriations bill includes funding.

The USPS this year sought money in three areas as part of the federal government's fiscal year 2005 budget. The largest request totaled $779 million for emergency preparedness.

The agency also requested the $29 million it is due as part of the Revenue Forgone Reform Act of 1993, which allocates $29 million annually to the USPS through 2035. This $29 million debt repayment would be the 12th of 42 payments on a more than $1.2 billion debt owed to the postal service.

The USPS also requested $75.88 million to fund the free mailing of materials used by the blind and for overseas voting materials. The combined request was $883.88 million.

The Bush administration budget plan included no funding for revenue forgone or emergency preparedness, and only $61.7 million for free mail for the blind and overseas voting materials. The House bill matched the White House's proposal. But the Senate bill allocates $29 million for revenue forgone, $61.7 million for free mail for the blind and overseas voting materials and $507 million for emergency preparedness.

“The Senate is definitely [moving] in the right direction,” said Kimberly Weaver, manager, government liaisons at the USPS. “They gave us the revenue forgone and they gave us emergency preparedness money, both of which are obviously very important to us. We hope that … the Senate language is what prevails.”

Weaver said there is little hope that the Senate will offer the USPS the full amount of emergency preparedness funding that it asked for.

“All the unfinished Senate bills are currently about $8 billion over the House bills, so I don't think there is much hope that the Senate is going to give us our full emergency preparedness [request],” she said.

But Weaver said the $507 million would cover the postal service's prior-year emergency preparedness expenses and “will get us through FY '05. Then, in January, we would obviously go and ask for any FY '06 money that we would need for emergency preparedness. We have made the argument over the past couple of years that these things are more appropriately funded by appropriations since they are homeland security kind of expenditures.”

Money not appropriated by Congress would have to come from revenue generated via a rate increase.

“If we don't get the emergency preparedness money, the postmaster general has said that we will do what it takes to protect the employees,” she said. “So, for things like the biohazard detection system and the ventilation and filtration system, the postal service will go ahead and fund those, and that means that the mailers will have to fund that.”

The USPS is expected to file a rate case in April, and rates could rise in early 2006.

“If Congress fails to gain the appropriate revenue forgone funds, as happened last year, the USPS may have to follow generally accepted accounting principles and list all the funds owed as a $900 million expense, or bad debt,” said Bob McLean, executive director of the Mailers Council, Arlington, VA. “However the debt is recorded, postage must increase to cover the costs, shifting the obligation from Congress to postal customers.”

And if Congress fails to pay for the anti-terrorism measures, “postage must increase to cover the costs, shifting the obligation from Congress to postal customers,” he said.

Regarding revenue forgone and materials used by the blind and overseas voting materials, Weaver said, “those are things that are statutory mandates. So the mailers would have to pay for any shortfall … because we have to provide those services by law.”

Weaver said the USPS is contacting House and Senate staff members to make them aware of the postal service's needs.

If Congress cannot reach a budget agreement in the lame-duck session, a continuing resolution likely would pass to fund the government until the 109th Congress begins its term in January. Many insiders are betting on a CR, given the short time frame of the session.

“If [Congress] does a CR instead of a budget, we won't get some of the money we are looking for,” McLean said. “We wouldn't get emergency preparedness funding, for example, unless Congress made some special exceptions, because [this funding] is considered new money, and if the government is funded to current levels, new money is excluded. If we don't get the anti-terrorism funding in particular, that's a significant kick to the rate case.”

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