Postal Service Officials Oppose Reform Legislation

WASHINGTON – After more than a year of seeking legislation to update how the post office is run, postal management said Wednesday both the House and Senate bills should be scrapped and the whole process started over.

Failure to win approval of provisions opposed by the Bush administration could lead to as mush as a 20 percent increase in postage rates, postal officials said.

"We believe there are critical elements missing from this bill, as well as numerous burdensome provisions that would make it extremely difficult for the Postal Service to function in a modern, competitive environment," the governing board of the Postal Service said in a letter to Sen. Susan M. Collins, R-Maine, who chairs the committee on government affairs.

The House reform bill approved last year contains similar provisions.

"We've worked long and hard with House and Senate staff ... to try to get corrections to the legislation and we just have literally reached the end of that rope," postal senior vice president Tom Day said in a telephone interview.

The problem centers on provisions for an escrow account and retirement benefits.

Legislation in 2003 required the post office to assume responsibility for retirement benefits earned by its employees during military service before going to work for the post office. That shifted an eventual responsibility of some $27 billion from the Treasury to the post office, and is not required of other government agencies.

Another past measure requires the post office to place $3.1 billion this year in an escrow account. That requirement was the only reason for the 2-cent increase in postage that took place earlier this month, agency officials said, and the escrow requirement increases in coming years.

While bills to modernize the postal operations would have eliminated those requirements, that would have made the federal deficit appear larger, drawing the veto threat from the administration.

Facing such a threat, Day said that postal management is concerned that the provisions would simply be dropped during House-Senate conference negotiations, and there is nothing else in the bills that would help the agency cut costs.

Other problems cited by postal officials in the bills are:

— A requirement that the Postal Service pre-fund retiree health benefits over the next 40 years. This would require an 8.9 percent postal rate increase in addition to any increase needed to meet operational costs.

— Granting the Postal Regulatory Commission new authority to hear complaints about every facet of Postal Service operations and order the Postal Service to take corrective action.