No rush on postal rate hike

March 13, 1984

THE jump from the 20-cent to the 23-cent stamp has been put off until next year. The reason: The US Postal Service is now showing a hefty budget surplus of around $400,000. That warrants public commendation in itself. It also raises the question whether postal rate increases will really be necessary during the months ahead. If they are not, they should not be granted.

The Postal Service, which is required by law to break even each year, requested a $3.5 billion-a-year package of rate increases to take effect this October.

At the time of the request, late last year, the Postal Service was projecting a deficit of $800 million for fiscal year 1984. But now, given the current operating surplus, the Postal Service says that it doesn't plan to actually increase postal rates until early in 1985. But it still wants its rate-increase package approved.

The independent Postal Rate Commission, which must examine any rate requests from the Postal Service, is expected to take a hard look at whether a new round of rate increases is justified, given the surplus. The commission is the agency that must approve any actual hike in mailing costs. Under the current Postal Service request, the cost of first-class mail would jump from the current 20 -cent rate to 23 cents.

That would still be lower than paid by persons in most other nations, such as 30 cents in West Germany and 25 cents in Japan and Canada.

Certainly, the Postal Service should not be denied any necessary operating expenses.

And much of the current surplus may be explained by the lower inflation rate for the past year, which meant that employee salaries - which are linked to the consumer price index - didn't rise as fast as postal authorities had anticipated.

In other words, labor costs have been held down for the moment. Energy costs for the service have also been lower than anticipated.

All the same, the Postal Service - to its good credit - has been showing that it can perform its task within existing budgets, and even post an operating surplus. Its surplus in fiscal year 1982 was $802 million. In 1983, it was $616 million.

Thus, the Postal Service has now made money for two years in a row - an impressive performance. And, as noted, the service currently has a surplus.

The Postal Rate Commission has up to 10 months to consider whether to approve a rate hike.

So even if the commission did not approve a hike this year, or only granted a smaller increase than requested, the Postal Service could always come back with a new rate hike request in 1985.