Post office requests 2-cent hike in stamp prices

The Postal Service wants to raise rates to bring in more money.

Postal officials said Tuesday they want to increase the price of a stamp by 2 cents to 46 cents.

The agency has been battered by massive losses and declining mail volume and faces a financial crisis.

Officials announced a wide-ranging series of proposed price increases, averaging about 5 percent and covering first class, advertising mail, periodicals, packages and other services.

The request now goes to the independent Postal Rate Commission, which has 90 days to respond.

The proposed increase comes as no surprise. Postmaster General John Potter said March 2 that a rate increase would be necessary for the agency, which does not receive tax funds for its operations.

The current 44-cent first-class rate took effect May 11, 2009.

While that change will be the most visible, rates for other types of mail will also go up, raising concern among business groups and nonprofit organizations.

Under the law, the post office is generally limited to increases no more than the rate of inflation — 0.9 percent for the year ended in May. But the agency is allowed to seek a larger increase in unusual circumstances. Potter said in March he planned to take that step.

"The projections going forward are not bright," Potter said then. But, he added: "All is not lost. … We can right this ship."

The agency lost $3.8 billion last fiscal year despite cutting 40,000 full-time positions and making other reductions. It has continued to face significant losses this year.

The weak economy has sharply reduced mail volume as companies cut their advertising. At the same time there has been a significant drop in lucrative first-class mail, with more and more people turning to the Internet to communicate with each other as well as to receive and pay bills.

The proposal drew a prompt complaint from the mailing industry.

"This proposed rate increase amounts to another tax imposed on Americans at a time when the economy can least afford it," said Tony Conway, executive director of the Alliance of Nonprofit Mailers, a group representing charities and other organizations.

"Consumers everywhere will pay more for the letters and packages they need to send; businesses — large and small — will suffer and even more jobs will be lost," complained Conway, who was designated spokesman for the Affordable Mail Alliance, a coalition of businesses, charities and other mailers formed to oppose the increase.

Postal officials also have proposed eliminating Saturday mail delivery as a means of cutting costs, a change that would require congressional approval.

Post office finances are also complicated by the requirement that the agency make annual payments to pre-fund future health benefits for retirees, something not required of other government agencies.

And the postal inspector general contends that the Postal Service has been overcharged billions of dollars for retirement benefits for employees who worked for the old Post Office Department before it was converted to the Postal Service in 1970.