The U.S. Postal Service has new powers to raise postage rates in 2021 given to it Nov. 30 by the Postal Regulatory Commission.
The PRC completed a three-year-long examination of a 2006 inflation-based price cap on postage increases. The National Newspaper Association has spoken to the PRC on numerous occasions about the need for price stability, but Congress delegated to the PRC the responsibility of deciding whether the capped-prices are raising sufficient revenue to keep USPS operating. The PRC decided months ago that it did not, but only last week did it set up a new set of postage increase rules.
The new rules allow USPS to raise prices to cover these costs:
- ongoing employee retirement liabilities, including a required prefunding of retirees’ health care mandated in 2006;
- losses of mail volume that result in fewer pieces being delivered to each mailbox;
- financial shortfalls created by some mail classes that do not produce enough revenue to cover the cost of processing and delivery, including Periodicals.
All of this new authority allows USPS to decide in 2021 to increase postage rates. It must first provide notice to the PRC and give the public 90 days to prepare for the increases.
The size of some of the increases will depend upon USPS calculations that must be confirmed by the PRC, such as the “density” totals of pieces per mailbox that would trigger price increases.
NNA believes that the new authority could lead to increases in excess of 7-9% a year for Periodicals and 5-7% for Marketing mail. Implementation is not likely in the first quarter of 2021 but may well occur in May-July, 2021.
NNA Chair Brett Wesner, president of Wesner Publications in Cordell, Oklahoma, said the NNA directors are considering responses to this dramatic new pricing authority.
“This PRC decision is somewhat of an improvement over the earlier proposals,” he said. “We feel we have gained some ground, but the result is still potentially disastrous. Price increases of this magnitude will prompt an accelerating downward spiral of USPS and new threats to the sustainability of newspapers that rely on the mail. But I want our members to be aware that while this is the PRC’s final decision, there are still two avenues of potential relief.
“The first is Congress. A portion of this decision is directly driven by Congress’ failure to enact postal reform bills that would address these ongoing retirement cost obligations. No other federal agency is expected to take on ‘debt’ when it is not able to prefund its future liabilities. We continue to lodge our complaints with the folks who need to fix this and that is the body of 535 members on Capitol Hill.”
“The second is the federal court,” Wesner continued. “NNA and others are considering litigation options. We have not yet reached the conclusion that a lawsuit is the best path. We are more inclined to think we need to fix this problem in Congress, In the meantime, USPS is going to be required to exercise some due process as it proceeds to implement new rates. Our members should be assured that NNA is following this process very closely, communicating with the incoming Biden-Harris transition team and readying our communications to Congress. We invite every publisher who is concerned both about their own expenses and the potential for these rates to drive the postal system to collapse to let me know their concerns. We need your commitment and support to fix this problem.”