In the U.S. Postal Service’s busiest month, many customers are worried less about getting Christmas cards and holiday packages mailed soon than they are about how their mail service may change next year.

Reasons for concern were detailed in a September report to Congress from the USPS Office of Inspector General:

  • By the middle of 2012, the Postal Service may not be able to pay its bills.
  • The Postal Service, which receives no tax support, ended FY 2011 with a net loss of $5.1 billion, bringing its 5-year net losses to a staggering $25 billion. A loss of $14 billion is projected this year.
  • Mail volume for the year declined by 3 billion pieces to 168 billion, the same level as in 1992.
  • USPS reduced work hours in 2011, saving $1.4 billion for the year, and has cut its workforce by 128,000 career employees since 2007.
  • A lack of significant volume growth and a statutorily imposed price cap on most products (including those that do not cover their costs) restrict the Postal Service’s ability to earn sufficient revenues to keep operating.

“The Postal Service requires radical changes to its business model if it is to remain viable into the future,” the inspector general report said.

Preventing closures

So far, Congress has responded with proposals that seek to prevent change, to bar or delay the closing of post offices or mail processing centers.

Congress also passed a bill that delayed a $5 billion payment to the U.S. Treasury mandated by a 2006 law, so that the Postal Service won’t have to pay until Dec. 16.

Montana’s delegation has been arguing forcefully against rural post office closures in our state, relaying public objections to closure of post offices and mail processing facilities.

“I’ll keep working on behalf of Montanans to craft a workable solution. It’s still too early to know exactly what any final product will look like,” Rep. Denny Rehberg, R-Mont., said last week when The Gazette asked him to comment on the problems the USPS faces.

Alcohol prohibition

Sen. Jon Tester, D-Mont., a member of the U.S. Senate committee with oversight responsibility for the USPS endorses a few of the inspector general’s cost-cutting/revenue raising recommendations, including one in S.1789 that would lift a Prohibition-era restriction barring the post office from delivering beer and wine.

But contrary to the inspector general’s recommendations, that bill would stop the USPS from closing rural post offices until it “fully considers alternative ways to save money.” Tester supports that provision.

We agree with him that relocating post offices to other businesses should be considered — wherever it makes good business sense.

Tester is justly concerned that S.1789 “does not provide sufficient flexibility for the Postal Service to set postal rates.” According to Tester’s office, the senator “believes that more rate flexibility can help increase the Postal Service’s revenue, thus lessening the need to close post offices, processing facilities and reduce personnel.”

Sen. Max Baucus, D-Mont., introduced legislation in early October that proposes to give USPS more time to make the retiree health prepayments mandated by a 2006 law, reduce future payments, and also transfer a $7 billion overpayment back to USPS. Baucus’ bill also would prohibit closing rural post offices that are more than 10 miles from the next post office.

Rural-urban savings

Members of Montana’s delegation say they want to protect rural postal customers from bearing the brunt of cost-cutting. However, the inspector general’s report says changes must be made in both rural and urban areas to bring USPS costs into alignment with revenues.

For example, converting city customers to curbside delivery would save up to $4.5 billion a year.

Paying urban letter carriers on the same model as rural carriers would improve efficiency. Rural carriers are paid by the route; city carriers usually are paid by the hour.

On the issue of closures, studies by the inspector general and independent consultants found that USPS has the right number and location of post offices in urban areas, but too many low-volume retail outlets in rural areas.

More than 35 percent of the Postal Service’s retail revenue comes from expanded access locations, such as, self-serve kiosks, grocery and office supply stores that sell stamps and flat-rate packaging. The Postal Service plans to expand those outlets as it closes low-activity offices.

Congress must act fast

Congress must allow the USPS to make changes necessary to continue delivering mail to people and businesses throughout our vast state and our great nation. The first step needed is removing the onerous mandates that have required USPS to make payments that pad the federal treasury, payments that exceed what any federal agency or private business is required to pay for retiree benefits.

Second, Congress must remove restrictions that prevent USPS from offering services (e.g. shipping microbrews) and allow it flexibility to set prices that cover its costs. Perhaps the biggest challenge for Congress is doing all this quickly. The Postal Service may run out of money before the proposed six-month moratorium on closing post offices would expire. There’s no time for wait and see. We call on Baucus, Tester and Rehberg to recognize that mail service must change and to push for innovative new ways of delivering the mail and providing postal services.

We’d like to see every Montana post office and mail-handling facility stay open, but that isn’t realistic. The status quo isn’t an alternative; the market has changed drastically. USPS must change dramatically to stay in business. The sooner a majority of U.S. legislators recognize that fact, the better.