[Mb-civic] Reuters.com - Postal Service Proposes 2-Cent Stamp Increase - Fri Apr 8, 2005 8:24 PM EST

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 Postal Service Proposes 2-Cent Stamp Increase
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Fri Apr 8, 2005 8:24 PM EST


 	

By Christopher Doering

WASHINGTON (Reuters) - The U.S. Postal Service on Friday proposed
increasing the price of a first-class stamp by 2 cents next year as part
of a sweeping rise in rates for most types of mail needed to fund a $3.1
billion escrow account requirement.

The Postal Service said the price of a first-class stamp would rise to
39 cents from 37 cents early next year if the increase is approved by
the Postal Rate Commission, an independent body that oversees the post
office.

The latest increase would be part of a broader 5.4 percent rate rise
that the Postal Service would apply to most packages. Stamp prices have
risen three times since 1999, most recently by 3 cents in June 2002.

Under the current proposal, Express Mail package overnight would
increase to $14.40 from $13.65, and Priority Mail, a heavily promoted
2-3 day service, would rise to $4.05 from $3.85 for a 2-pound package.

Congress ordered the Postal Service in 2003 to establish the escrow
after government auditors determined the agency was overpaying to its
retirement fund. The excess payments were instead placed in the account,
which the post office can not use to run its operations without
additional congressional legislation.

"If we did not have this legal obligation the prices wouldn't be going
up," said Jerry McKiernan, manager of media relations for the Postal
Service.

The Postal Service vowed to eliminate the rate increase if Congress
removed the escrow funding requirement.

"From everything that I hear, it makes me fairly confident that
something will happen (in Congress) this year," said Brynn Barnett, a
spokesman with with Rep. John McHugh, a New York Republican who has
introduced legislation to overturn the escrow payment requirement.

The rate increases come as the Postal Service's lucrative first-class
business, which generates more than half of the agency's revenue, has
declined amid increased competition from e-mail and commercial delivery
services such as FedEx Corp. and United Parcel Service Inc. .

The 230-year old Postal Service delivers mail to 142 million homes and
offices each weekday. 

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