2017-09-11 Mon

Can you imagine spending 60 cents on a postage stamp? Well, get ready as the U.S. postal service would have to boost prices for mailing letters and packages by nearly 20 percent. This has been the biggest one-time increase in its history – to avoid bankruptcy and improve delivery service. That means the price of a first-class stamp could jump from 49 cents to nearly 60 cents.

The Postal Service is persuading the agency that oversees it, the Postal Regulatory Commission, to grant the biggest change to its pricing system in a half century.

If the Postal Service increases rates, it could add substantially to the cost of mailing prescription drugs and magazines, for example. Packaging and bulk-mail rates would fall under the category, straining tight budgets for an increasing number of state and local governments that distribute election ballots by mails.

Colorado, Oregon and Washington depend on mails to conduct elections, while California is making the switch and will get mail ready by the beginning of 2020 elections. Other states too mail out ballots as a part of early voting. Ballots are typically distributed via bulk mail and returned by voters with first-class postage.

Amber McReynolds, the director of elections for the city and country of Denver says that it is a cause of concern for them if any change affects the voter’ s ability to get their mail ballots in. Her country is among several jurisdictions that cover the expense if voters don’t affix enough postage.

The Postal Service did not dispute the industry’s analysis, which was conducted for the Coalition for a 21st Century Postal Service, a broad trade group that includes mailers from Amazon to the Greeting Card Association and National Retail Federation.

Trade groups already anticipate lawsuits to block any decision that grants the post office pricing freedom.

Art Sackler, the manager of the Coalition for a 21st Century Postal Service, said many mailers have expressed concerns about the commission’s legal authority to lift the rate cap on postal rates. In previous cases where the Postal Service has sought special exemptions to raise rates beyond inflation, mailers have sued to block the move.

The Postal Service is putting all the blame on Congress for its financial troubles, noting declining use of mail but also onerous retiree health benefit costs. In 2006, legislation was passed that required the Postal Service to refund 75 years worth of retiree health benefits. But things can stabilize this year after a bipartisan bill, which will take away the Postal Service’s burden caused by health benefits requirement, thus avoiding a significant price increase. But the legislation has been stalled by a separate review in the House Ways and Means Committee, which is seeking to focus first on overhauling the nation’s tax code.

Congress can go easy on the Postal Service and give them pricing flexibility, but the House bill currently allows only a one-cent increase.

The industry analysis found the Postal Service would have to raise rates by 17.6 percent for letters and packages to cover billions in current losses. When including a planned $6 billion overhaul of the post office’s 30-year-old truck fleet, the amount of rate increase required would be nearly 19 percent, or more than 9 cents, for a first-class stamp.

That one-time increase would not include hikes due to inflation. Trade groups already anticipate the Postal Service will propose a penny increase early next year based on the consumer price index.