NAA Public Policy News, September 2005

Review of Postal Rate Case Set to Begin

During the week of Sept. 26, the Postal Rate Commission is expected to begin its review of a proposed settlement of the pending postal rate case. Many mailer organizations have signed the proposed settlement with the Postal Service. If the commission approves the settlement, new postage rates are likely to go into effect Jan. 1, 2006.

Most mailers will experience a 5.4 percent increase in postage with the new rates. However, because of a quirk in the governing law, rates for within-county weekly newspapers are expected to go down by about 5.5 percent. The new rates will provide the Postal Service with $3.1 billion - the amount needed to cover an escrow requirement imposed by Congress in 2003 when it set forth changes to the Postal Service obligations in the Civil Service Retirement System. The escrow account must be fully in place by Sept. 30, 2006. The history of this escrow requirement is complex. For two years, the USPS has collected these revenues and used them to repay debt. Now, with the debt essentially repaid, the law still obligates USPS to collect the money and, unless directed otherwise by Congress, the money will go into an escrow account.