Postal Service backs off plan to stop Saturday delivery, hints at layoffs, price hikes

The U.S. Postal Service on Wednesday said it will delay a cost-cutting plan to end Saturday mail delivery, following congressional action that blocked the effort -- as the agency suggested it might have to turn to rate increases and layoffs as an alternative.

In a tersely worded announcement, the agency’s board of governors said it was “left no choice” but to delay the plan after Congress passed a temporary federal spending bill last month that stopped the plan.

The decision at least temporarily ends a stand-off between Congress and the agency, which asserted it had the legal authority to move to a five-days-a-week delivery schedule.

However, Congress sought a legal opinion from the Government Accountability Office, which concluded March 21 that the agency does not have the authority.

“I applaud today’s decision by the board of governors to direct the postmaster general to cease his misguided efforts to blatantly disregard the will of Congress and the rule of law itself,” said Virginia Democratic Rep. Gerry Connolly, among those who opposed the agency's plan.

The announcement by the agency’s board of governors also hinted at delivery-rate increases and possible layoffs as alternative cost-cutting strategies.

"The Board has directed management to seek a reopening of negotiations with the postal unions and consultations with management associations to lower total workforce costs," the board said in a letter.

A Postal Service spokesman also told the Postal Act of 2006 caps price increases for such products and services as standard and first-class mail letters. However, the law essentially allows increases above the inflation rate due to “exceptional or extraordinary circumstances.”

The financially troubled agency lost $15.9 billion last year and $5.1 billion in 2011. As a result, the agency over the past few years has tried to implement several different cost-cutting strategies including ending Saturday mail deliveries, closing or cutting hours at low-volume post offices and selling hundreds of properties.

“The board will follow the law and has directed the Postal Service to delay implementation of its new delivery schedule until legislation is passed that provides the Postal Service with the authority to implement a financially appropriate and responsible delivery schedule,” the  board also said in the statement.

However, members made clear they have not abandoned the plan that they think will save the Postal Service roughly $2 billion annually, saying it is a key part of a five-year strategy to restore the agency to long-term financial stability.

“It is not possible for the Postal Service to meet significant cost-reduction goals without changing its delivery schedule,” the statement said. “Any rational analysis of our current financial condition and business options leads to this conclusion. Delaying responsible changes … may become a burden on the American taxpayers.”

The agency wanted to start the Monday-to-Friday mail delivery Aug. 5. However, the plan included keeping Monday-to-Saturday package deliveries.

The Postal Service disposed of 43 properties in 2011 and 49 in 2012, with the help of real estate firm CBRE. The agency in fiscal 2012 generated $228 million from the rental and sale of facilities, according to a recently released annual report.