Postal Rate Increases Frozen until 2006 thanks to Carper Postal Bill Passed By Full U.S. Senate

WASHINGTON, D.C. – Postal rate increases will be frozen until 2006, providing significant, across-the-board savings for Delawareans- individual private citizens, small and large businesses, even the state government. The United States Postal Service has been hurt both by the recession and a decrease in volume caused by the growing popularity of email and electronic bill pay. Legislation written by Senator Tom Carper frees up more than $78 billion the Postal Service would have overpaid in pension payments, allowing use of the savings to keep postal rates flat. The Postal Service had indicated it would need to raise prices next year if it was not allowed to reduce fund payments. The full U.S. Senate passed the bill unanimously late last week. The full U.S. House did the same this week. The bill is now on its way to the President for his signature. “This legislation gives everyone, from individuals and small businesses to some of our state’s largest mailers, a sorely needed break in tough economic times,” Senator Carper said. “Postal customers have absorbed multiple rate increases in recent months that have raised the price of postage by more than the rate of inflation. With this bill the Postal Service will be able to hold the price of postage steady until at least 2006, correcting a problem that would have been costly to postal management, postal employees and postal customers.” Savings from Carper’s legislation for the State of Delaware have been estimated at more than $370,000 over the next three years. The last rate increase raised the price of a first-class stamp from 34 cents to 37 cents, a rate increase of 8 percent. S.380, which Carper co-authored with Senator Susan Collins (R-ME), corrects a funding mechanism problem that could have caused the U.S. Postal Service to over-fund its contributions to the Civil Service Retirement Fund by $78 billion. It allows the Postal Service to realize the reduction by correcting the statutory funding mechanism for the Civil Service Retirement System (CSRS). The bill also directs the Office of Personnel Management (OPM) to determine a new amortization schedule that will pay off the Postal Service’s existing unfunded CSRS liability of $5 billion. “The Governor’s of the Postal service are very pleased that the Senate passed S.380, the Postal retirement funding bill, under the strong leadership of Governmental Affairs Chairman Susan Collins and Senator Tom Carper. Enactment of this legislation will enable the Postal Service to retire a portion of its outstanding debt and, as importantly, maintain postal rates at current levels until 2006,” said U.S. Postal Service Board of Governors Member Robert Rider. “This would be an enormous economic boost to the $900 billion mailing industry, and, as Senator Carper and I have discussed in our several meetings, it would provide a very tangible benefit to the millions of Americans who use the nation’s mail system each and every day.” Rider resides downstate and owns a business in the area. The legislation allows the Postal Service to use the savings resulting from this legislation to fulfill its commitment to hold postal rates unchanged until at least 2006, and to pay a portion of their massive unfunded health care liabilities. It also stipulates that the savings not be used to pay bonuses to Postal Service executives. Recently, the Office of Personnel Management discovered that higher than expected yields on pension investments by the Department of Treasury were causing the Postal Service to dramatically over-fund its contributions to the Civil Service Retirement System (CSRS). With the passage of this legislation, the Postal Service’s CSRS retirement expenses will be reduced by $2.9 billion in FY 2003, and another $2.8 billion in FY 2004. Carper sits on the U.S. Senate Governmental Affairs Committee, which has jurisdiction over postal reform issues. Language identical to S.380 will be introduced this week in the U.S. House. The President is expected to sign it into law.