It’s been a busy few months for the Postal Service as it continues to push legislators with hopes of accomplishing meaningful postal reform before the hustle and bustle of yet another election year. With much to talk about, and much to get done, let’s jump into the latest from Washington.
The Need is Still Urgent
The Postal Service announced its FY2014 second quarter results last week. It was pretty much the same story as other recent quarters—a modest profit on “controllable” operations activities, but a significant loss when non-operations charges were factored in, especially pre-payments into its Retiree Health Benefits Fund.
While the operational profit is encouraging, the ongoing overall losses highlight the urgent need for postal reform legislation to adjust the Postal Service’s business model and put it on the road to a financially secure future. Other key financial measures, including the low level of cash reserves and maxed-out borrowing authority, reinforce the need for reform. Reform legislation would also refocus press attention on the Postal Service from its financial struggles to how it is reshaping its services to meet the needs of the 21st century.
Senate Bill Raises Concerns
The Senate Governmental Affairs Committee recently passed on to the full Senate S. 1486, The Postal Reform Act of 2014. This bill includes many positive elements, such as allowing USPS retirees to take advantage of Medicare eligibility, a more reasonable amortization schedule for retiree healthcare pre-payments and the return of overpayments into the Federal Employees Retirement System (FERS) pension plan.
Unfortunately, the section of the bill related to Postal Service governance and rate making is entirely unacceptable to mailers. This section of the bill takes away much of the Postal Regulatory Commission’s oversight authority, including its role in setting postage rates, and transfers that authority to the USPS Board of Governors. This is essentially giving a monopoly the ability to set its own prices without effective supervision and control. This section also makes permanent the recently enacted exigent rate increase that was designed to be in place only temporarily to allow the Postal Service to recover a specific amount of supposedly “lost” revenue due to the Great Recession.
Kudos to Sen. Tammy Baldwin (D-WI) for her tireless efforts to protect the paper, printing and mailing industries by seeking compromise language that would ensure continued robust oversight of the postal monopoly and allow a sunset for volume-crippling exigent rates.
This bill is not expected to be brought before the full Senate in its present form due to an amendment added during committee mark-up, which would allow guns to be carried in Post Offices.
New House Proposal Withdrawn in Committee
A reform measure that last year passed the House Government Reform Committee seems to be stalled due to opposition from most Democrats and rural Republicans. Concerns about provisions to allow implementation of 5-day mail delivery and continued closure of rural Post Offices are the basis of the opposition. In response, committee chairman, Rep. Darrell Issa (R-CA), floated a discussion draft of a new bill earlier this month. While this new bill more closely aligned with reform proposals included in the President’s budget, Rep. Issa was unable to gather much support for the measure for many of the same reasons the previous measure stalled. As a result the committee mark-up was canceled.
Chairman Issa now seems to be taking a more piecemeal approach toward postal reform. A bill to reduce door delivery of mail and replace it with curbside or clusterbox delivery passed the committee on a party-line vote on Wednesday, and the committee is expected to consider a bill allowing 5-day delivery of mail next week.
A Path Forward?
This is an election year and there are a limited number of legislative days left before the election. That makes it unlikely that either house of Congress will take up sweeping reform initiatives yet this year. So where do we go from here?
The mailing industry and the postal unions are continuing informal discussions to identify those elements of reform where we are in agreement. If the industry and the unions can bring forward a proposal they both support and get buy-in from the Postal Service, there is still a chance that a smaller, more focused reform bill could pass later this year.
Please talk to your legislators and tell them how important postal reform is for your company—and why making the exigent price increase permanent isn’t the answer. It will drive down postal volumes and make the road to financial stability for the Postal Service even longer.
We are guardedly optimistic that a small, focused bill is still possible this year. We’re staying engaged in the discussion and will provide updates as they become available through SpeakingDIRECT.