Contact: Jeannine Guttman
(202) 224-4751
March 14, 2005

SENATOR COLLINS URGES BUDGET COMMITTEE TO INCLUDE FUNDS FOR POSTAL REFORM

Collins-Carper expected to introduce postal reform legislation this week

Washington, DC – Senator Susan Collins (R-ME) has written a letter to the Senate Budget Committee urging that they include a reserve account in the Fiscal Year 2006 budget for “meaningful” postal reform. Senator Collins is expected this week to introduce postal reform legislation that she authored with Senator Tom Carper (D-DE). Senator Carper also signed the letter to the Budget Committee. Senator Collins is the Chairman of the Senate Homeland Security and Governmental Affairs Committee, which has jurisdiction over the United States Postal Service (USPS).

“The Postal Service is the linchpin of a $900 billion mailing industry that employs nine million Americans in fields as diverse as direct mailing, printing, catalog production, and publishing,” wrote Senators Collins and Carper. “Few dispute that the business model created by the Postal Reorganization Act (PRA) 35 years ago is becoming increasingly disconnected from today’s reality. It is outdated and inflexible. The PRA was predicated on the assumption that continually growing mail volume would result in continually expanding revenue. That revenue, in turn, would be sufficient to cover the costs of an ever-expanding service network. This is no longer the case.”

Last year, CBO scored the postal reform bill, S. 2468, at $9.6 billion from 2006-2010, with a first year score of approximately $5.4 billion. The cost of S. 2468 was associated with the proposed repeal of an escrow account provision put into place by P.L. 108-18, the Civil Service Retirement System Funding Reform Act of 2003. The Senators anticipate the first year score for the reintroduced bill to decrease by several billion, as it will require the USPS to make payments into a new Postal Service Retiree Health Benefits Fund beginning in 2006, rather than in 2007, as was proposed by S. 2468.

“Failure to repeal the (escrow) provision will directly impact the Postal Service’s rate planning and will trigger annual rate increases, over and above any rate increases needed to fund postal operations,” wrote Senators Collins and Carper. “The soon-to-be-reintroduced bill will reflect the need to balance the pre-funding of retiree health benefits with the ability of the mailing community to withstand continued rate increases. This bill will propose to use the escrow funds to pre-fund post-retirement health benefit obligations; to pay down any outstanding debt to the Treasury; and to hold down operating expenses–thereby holding down rate increases as well.”

Senator Collins expects to introduce postal reform legislation on Thursday. Similar legislation introduced by Senators Collins and Carper was unanimously approved last Congress by the Homeland Security and Governmental Affairs Committee.