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Cost of a stamp could go up to 46 cents in January

WASHINGTON (AP) - The post office wants to increase the price of
a stamp by 2 cents to 46 cents starting in January. The agency has
been battered by massive losses and declining mail volume and faces
a financial crisis.
Postal officials announced a wide-ranging series of proposed
price increases Tuesday, averaging about 5 percent, and covering
first class, advertising mail, periodicals, packages and other
services.
The request now goes to the independent Postal Rate Commission
which has 90 days to respond. If approved, the increase would take
effect Jan. 2.
"The Postal Service faces a serious risk of financial
insolvency," postal vice president Stephen M. Kearney said.
Kearney said the agency is facing a $7 billion loss in 2011. The
rate increase will bring in an extra $2.5 billion, meaning it still
faces a $4.7 billion loss.
The rate increase is part of a series of money-saving plans
announced in March. These also include reducing mail deliveries to
five days a week, closing offices and making other cuts in
expenses. Congress must agree to eliminating deliveries on
Saturdays.
While the cost of a first-class stamp would go up to 46 cents,
people who bought "Forever" stamps at lower prices will still be
able to use them for first-class mail without paying the
difference.
Officials also said they plan a new design for Forever stamps,
which currently have am image of the Liberty Bell. New Forever
stamps will have images of evergreen trees. All Forever stamps
would remain valid.
In addition to the 46-cent rate for the first ounce of a letter
the cost for each additional ounce would go up a penny to 18 cents.
The cost to mail a post card would go up 2 cents to 30 cents.
The price to send periodicals would go up about 8 percent and
other rates for advertising mail, parcels and services will also go
up by varying amounts.
The current 44-cent first-class rate took effect May 11, 2009.
The agency lost $3.8 billion last fiscal year despite cutting
40,000 full-time positions and making other reductions. It has
continued to face significant losses this year.
The weak economy has sharply reduced mail volume as companies
cut their advertising. At the same time there has been a
significant drop in lucrative first-class mail, with more and more
people turning to the Internet to communicate with each other as
well as to receive and pay bills.
The proposal drew a prompt complaint from the mailing industry.
"This proposed rate increase amounts to another tax imposed on
Americans at a time when the economy can least afford it," said
Tony Conway, executive director of the Alliance of Nonprofit
Mailers, a group representing charities and other organizations.
"Consumers everywhere will pay more for the letters and
packages they need to send; businesses - large and small - will
suffer and even more jobs will be lost," complained Conway, who
was designated spokesman for the Affordable Mail Alliance, a
coalition of businesses, charities and other mailers formed to
oppose the increase.
Postal officials also have proposed eliminating Saturday mail
delivery as a means of cutting costs, a change that would require
congressional approval.
Post office finances are also complicated by the requirement
that the agency make annual payments to pre-fund future health
benefits for retirees, something not required of other government
agencies.
And the postal inspector general contends that the Postal
Service has been overcharged billions of dollars for retirement
benefits for employees who worked for the old Post Office
Department before it was converted to the Postal Service in 1970.

(Copyright 2010 by The Associated Press. All Rights Reserved.)


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