Post office proposes raising stamp price
By Marisol Bello
USA Today

 

 

 

The U.S. Postal Service wants to raise the price of a first-class stamp by 2 cents to 46 cents to avoid running out of cash next year, officials said. A sharp decline in mail volume, the recession and increased use of the Internet to pay bills have contributed to a financial crisis.

 

On Tuesday, postal officials proposed mitigating the problem with an average 5.6% increase on a range of services that include first-class mail, advertising mail, periodicals and packages. The increase, about 13 cents a month for the average household, would go into effect Jan. 2.

 

"It really comes down to potential financial insolvency," said Stephen Kearney, the agency's senior vice president of customer relations. "We've never seen anything like this."

 

Mail volume dropped 20% from the first quarter of fiscal 2007 through the second quarter of fiscal 2010, worse than the declines after 9/11 and the anthrax attacks in 2001, he said.

 

The post office receives no public money and relies on the sale of postage, products and services.

 

Under a 2006 law, the agency can not raise rates higher than the rate of inflation, which is .6%. However, the law allows the agency to cite extraordinary circumstances if it seeks higher price increases.

 

The Postal Regulatory Commission, which oversees the service, has 90 days to vote on the proposal.

 

Maine Sen. Susan Collins, the ranking Republican on the committee that oversees the agency, said, "The Postal Service's plans to hike rates so substantially … may well produce a death spiral of fewer customers and ever declining volume."

 

About 200 non-profits, retailers and publishers that rely on mail service have formed the Affordable Mail Alliance to fight the increases. Jim Cregan, of the Magazine Publishers of America and an alliance member, said, "This is going to be a huge whack on the bottom-line for publishers."

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