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$251.5-Million Loss Is First in 3 Years : Postal Service Runs Up a Deficit

December 04, 1985|Associated Press

WASHINGTON — After three years of operating at a surplus, the Postal Service ran up a $251.5-million deficit during fiscal 1985, Postmaster Paul N. Carlin said Tuesday.

The mail service "anticipates a positive result in fiscal year 1986," he added.

No general postage rate increase is anticipated for next year.

Money from past years' profits was used to balance the books, with $58 million remaining in the equity reserve fund at the end of the fiscal year Sept. 30.

The first two four-week accounting periods in the new year have shown a surplus, with $209.9 million in the bank so far. Carlin said that is $184 million ahead of projections.

He credited employees at all levels with bringing expenses in line to prevent a deficit that, at midyear, was projected at $500 million or higher.

In an effort to reduce costs, the Postal Service cut the number of extra hours worked by employees and hired new workers at lower pay levels to keep up with a 5.9% increase in mail volume.

In addition, Carlin and 33 other postal executives took a pay cut for part of the year, and a pay raise for 714 other managers was delayed.

Revenue was enhanced by a postage rate increase that went into effect Feb. 17.

Carlin said that overtime at the beginning of the fiscal year, before the new two-tier postal wage scale went into effect, increased costs caused by frequent changes in airline schedules--a byproduct of airline deregulation, and the United Airlines strike, which forced mail onto more costly truck routes, all added to the postal deficit.

Gloria's Contribution

Hurricane Gloria contributed to last year's deficit and this year's surplus because a number of organizations delayed large mailings as the storm worked its way up the East Coast in the final week of the postal year. Mailers spent $27.7 billion to mail 140 billion pieces of mail during the 12 months ended Sept. 27.

"Expenses are under control" and "overtime is now back to reasonable levels," Carlin said.

No general postage rate increase is expected for 1986, but nonprofit organizations, newspapers delivered in the county where they are printed and other mailers subsidized by the taxpayers will face higher rates on Jan. 1, the postal board of governors has decided.

The previously announced increases, formalized at Tuesday's governors' meeting, will run between 23% and 41%.

For 1987, the governors voted to ask Congress for $833.2 million to make up for the difference between regular rates and the reduced rates that Congress requires the Postal Service to offer qualified organizations--everything from church newsletters and fund-raising mailings by political parties to free mail for the blind.

The Reagan Administration has balked at paying the cost of some of these subsidies, and, on Nov. 15, President Reagan vetoed the legislation providing those supports for the current fiscal year. The subsidies are now being provided via a short-term spending authorization that expires Dec. 12.

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