Red ink for post office: $8.5 billion last year
WASHINGTON The post office had estimated it would lose $6 billion to $7
billion, but a sharp decline in mail took a toll. Increased use of
the Internet and the recession, which cut advertising and other
business mail, meant less money for the agency.
For the year that ended Sept. 30, the post office had income of
$67.1 billion, down $1 billion from the previous year. Expenses
totaled $70 billion, a decline of about $400 million. The post
office also was required to make a $5.5 billion payment for future
retiree health benefits.
"Over the last two years, the Postal Service realized more than
$9 billion in cost savings, primarily by eliminating about 105,000
full-time equivalent positions -- more than any other organization,
anywhere," chief financial officer Joe Corbett said in a
statement. "We will continue our relentless efforts to innovate
and improve efficiency. However, the need for changes to
legislation, regulations and labor contracts has never been more
obvious."
The post office is currently in contract negotiations with two
of its unions, with two more scheduled to be negotiated next year.
The loss of $8.5 billion in 2010 was $4.7 billion more than the
previous year.
Mail volume totaled 170.6 billion pieces, compared with 176.7
billion in 2009, a decline of 3.5 percent. At the same time, volume
was declining the post office was required to begin service to
thousands of new addresses to accommodate population growth and new
businesses.
The post office has asked Congress for permission to reduce mail
delivery to five-days-a-week and to eliminate annual payments for
future retiree health benefits.
Sen. Tom Carper, D-Del., blamed the loss on the recession and
"operating restraints placed on postal management." The result,
he said, may represent the most serious threat to the post office
in its 200-year history.
"If corrective action is not taken quickly, the Postal Service
will likely run out of cash and borrowing authority by this time
next year, placing its ability to continue operations in serious
jeopardy," said Carper, who urged quick congressional action.
Fredric V. Rolando, president of the National Association of
Letter Carriers, said the loss "comes as no surprise."
"For the Postal Service to improve its financial situation, the
government must let the USPS manage its financial affairs in the
most effective manner possible, like any other business," he said.
"Essential to that process would be for Congress to fix an onerous
congressional mandate from 2006, which obligates the Postal Service
to make annual payments of $5.5 billion to pre-fund future retiree
health benefits. No other institution in America, public or
private, has to do this."
A request from the agency for a 2-cent increase in postage rates
to take effect next year was recently turned down by the
independent Postal Rate Commission. The post office has appealed
that decision in federal court.
While the post office does not receive tax money for its
operations it still must answer to Congress, which has been
reluctant to agree to closing of local post offices and centers.
Some have suggested privatizing the service, but the requirement
to provide service everywhere in the country at the same price is
not likely to be attractive to private companies.
Of particular concern has been the decline in the lucrative
first-class mail, largely consisting of personal letters and cards,
bills and payments and similar items. First-class mail volume fell
6.6 percent in 2010, 8.6 percent in 2009, and 4.8 percent in 2008.
Traditionally, this mail has produced more than half of total
revenue.
Volume for standard mail -- advertising and similar business
items -- improved somewhat, indicating some signs of economic
recovery, but generates less income.
Postmaster General John Potter, who retires in December, has
developed a 10-year plan for the future of the post office, but
parts of that plan require congressional action.
