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Postal Rates Go Up Sunday
It's the first increase in postal rates since 2002, when the first-class rate went from 34 to 37 cents. But it may be followed by another rate hike next year.
In addition to 39 cents for a letter, postcards and additional ounces have increased from 23 to 24 cents. There are corresponding increases for other services as well.
"This rate increase that goes into effect on Sunday is 5.4 percent across the board," U.S. Postal Service spokesman Gerald McKiernan told The Virtual Stamp Club before the increase went into effect. "Every rate class that we have is being raised equally."
Local post offices should have plenty of new Statue of Liberty-and-Flag stamps, in all formats — sheets, coils, and booklets. No denomination is printed on the new 39-cent stamps; a denominated version is expected next month.
In addition, the Postal Service has replenished its stock of two-cent Navajo Necklace stamps. Some post offices may also have sheets of a one-cent Kestrel stamp or rolls of a one-cent Tiffany Lamp, so that customers can use up their 37-cent stamps.
Still, many post offices were caught short on the two-cent stamps, apparently as a result of a run on the stamps by some and a lack of awareness by other customers that a rate increase was coming. (See the discussion in our message board.)
The first 39-cent commemorative stamps are the Favorite Children's Book Animals, a set of eight that includes Curious George, the Very Hungry Caterpillar, and Maisy, issued January 10th, and followed a day later by Winter Olympics.
Other stamps to cover other rates as well as new stamped envelopes will be issued over the next several months.
VSC discussion of the next rate increase
See The Rate Change Stamps
2006 U.S. Stamp Program Schedule
Complete chart of the new rates
Times have been good for the agency. The USPS "ended 2005 with a record sixth consecutive year of growth in productivity, wiped out its debt and delivered fifty percent more mail to 32 million more homes and businesses than it did 20 years ago," it declared in a press release last month.
So why implement what the Postal Service calls an "artificial" rate increase?
"The postal increase that goes into effect on Sunday really has nothing to do with postal expenses, such as salaries or the rising cost of fuel or maintenance of buildings. It has everything to do with fulfilling the obligations of an escrow account that Congress established in the year 2003," McKiernan said.
"But that $3.1 billion will not be used for postal operations," he added.
Originally, the fund was earmarked (at the request of the administration) to pay for the military pensions of veterans who subsequently went to work for the Postal Service. The USPS asked Congress to intervene, but all that happened was that the eventual use of the escrow fund is still up in the air. The agency still has to come up with $3.1 billion.
Because the 2006 rate increase doesn't cover postal operating expenses, another hike is likely next year.
"As I think everybody knows, every household knows, that the cost of living has increased ... and we will ultimately begin to have to look at how we pay for those increases down the road," McKiernan said.
A one-cent increase in the price of gasoline costs the USPS $8 million, he said.
So the Postal Service is thinking about requesting another rate increase.
The USPS Board of Governors might make the formal request in late spring of this year. It then goes to the independent Postal Rate Commission, which can take (and usually does) up to 10 months to make its recommendations.
The PRC can accept the USPS request, deny it, or modify it. The Board of Governors then can accept the PRC recommendations, or override them — but only by a unanimous vote.
The Postal Service then needs a month or two to get ready for a rate change. All that puts the next increase no sooner than early 2007.
No such cumbersome process is needed for international rates: The USPS can raise them at will, and is, also effective Sunday. One-ounce letters to Canada and Mexico will cost 63 cents, and 84 cents to the rest of the world.
Within the U.S., Priority Mail packages will start at $4.05, up from $3.85, and Express Mail, up to a half pound, goes from a starting price of $13.65 to $14.40.
Postal customers with packages who want to avoid the inevitable lines Monday may want to use the Automatic Postal Center machines in many post office lobbies that accept debit or credit cards, or the USPS Web site, www.usps.com.
The U.S. Postal Service became a quasi-independent company in 1971, but its owner is the federal government, and its Board of Governors is appointed by the president. Although it does not receive direct subsidization from the government, it is reimbursed for some of the special services it provides, such as free mailing privileges for members of Congress and those in military service outside the U.S. It also does not have to pay federal, state or local taxes.