Postal Increase to Be Proposed

After raising postage rates twice already this year, the U.S. Postal Service last week announced that it planned to propose another increase that would go into effect next year.

Citing a projected deficit of $1.65-billion in 2001, the Board of Governors of the service will request an average overall increase of 8.7 percent, including a three-cent hike in the price of a first-class stamp, raising the cost from 34 cents to 37 cents. If approved by the Postal Rate Commission, an independent body that studies postal-rate changes, the new rates would most likely take effect a year from now.

Estimates of how the rates would affect nonprofit groups were unavailable at press time.

In January, the rates for nonprofit mail increased by an average of 4.8 percent. On July 1, the cost for nonprofit groups to send a standard letter rose 2 percent, and the cost to mail periodicals rose 1.4 percent.

According to the Direct Marketing Association, a trade association for businesses and nonprofit organizations that use the mail extensively to promote products, services, and causes, this is the first time that the Postal Service has increased rates and sought approval for another increase in the same year. “We are really disappointed,” said Jerry Cerasale, senior vice president for government affairs. “At the time of a downturn in the U.S. economy, we think it is the exact wrong thing for them to do. It will dramatically hurt volume and revenue for the future.”

The Postal Service says the deficit is because of the economic slowdown, and rising labor, fuel, and health-care costs. In order to cut expenses, it has suspended spending $1-billion to construct or renovate buildings.