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Improving Postal Service finances fuel debate over legislation

May. 9, 2014 - 04:42PM   |  
By ANDY MEDICI   |   Comments
Postal Service Announces End To Saturday Delivery
The US Postal Service's improving financial condition is sparking debate on the degree of reform it needs. (Kevork Djansezian / Getty Images)

The Postal Service continues to clash with outside groups over its improving financial situation – arguing that it needs wide-ranging reform to rein in costs and invest in long-term improvements.

The agency announced a second quarter net loss of $1.9 billion and said its precarious financial position requires Congress to pass comprehensive postal legislation to help it reduce its workforce, end Saturday mail delivery and make needed investments in its fleet and infrastructure.

But unions and some lawmakers argue that without having to prefund its retiree health benefits – at about $5.6 billion a year - it actually made an operating profit of $261 million and more than $1 billion so far in fiscal 2014.

“Some comments in recent news reports suggest that all we need from Congress is help with restructuring our retiree health benefit plan,” said Chief Financial Officer Joseph Corbett. “Nothing can be further from the truth.”

He said the agency’s liabilities exceed its assets by $42 billion. The Postal Service needs more than $10 billion to invest in new delivery vehicles, package sorting equipment and other capital investments, he added.

“If legislation reduced the required retiree health benefit prefunding payment, it doesn’t provide us with any more cash to pay down our debt or put much-

+needed capital into our business,” he said.

Fredric Rolando, president of the National Association of Letter Carriers, said the improvement in the financial condition of the Postal Service has been steady as mail volume begins to stabilize and package delivery continues to grow.

"Given these positive trends, it would be irresponsible to degrade services to the public, which would drive away mail -- and revenue -- and stop the postal turnaround in its tracks. Lawmakers shouldn't dismantle the postal network that is profitable in meeting the needs of an evolving society,” he said.

He said the Postal Service is the only organization that must prefund its retiree health benefits, about $5.6 billion a year, which accounts for the losses.

Sens. Tom Carper, D-Del., and Tom Coburn, R-Okla., the chairman and ranking member of the Senate Homeland Security and Government Afairs Committee, said the newest numbers show the need for wide-ranging reform.

“The harsh reality is that it’s likely we’ll continue to see the U.S. Postal Service suffer unsustainable losses that threaten its long-term viability until Congress acts.,” Carper said in a statement.

The House and the Senate each have introduced postal legislation and must now work to pass a bill reforming the agency, Carper said.

Rep. Elijah Cummings, D-Md., said any postal legislation would have to focus on bipartisan areas of agreement and would give the Postal Service the authority to explore new products and innovative measures.

“The improving economy and the significant growth in postal package services have helped the financial condition of the Postal Service, especially compared to several years ago, but we still need comprehensive reform legislation to ensure the long-term financial stability of the Postal Service,” Cummings said to Federal Times, as reported in a May 5 story.

There is a growing consensus that the Postal Service cannot cut its way to growth by closing post offices or ending services, Rep. Gerry Connolly, D-Va., said.

Legislation that would end the prefunding requirement would represent a “huge victory,” but he said the Postal Service is holding back that legislation by only supporting a major overhaul.

“It is incredibly disappointing that as the proverbial ship is sinking, the postmaster general appears obsessed with stubbornly insisting that the deck chairs be arranged precisely as he wishes, rather than urgently acting to secure relief in plugging the hole that responsible for the sinking the entire ship,” Connolly said in a May 5 story.

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