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1st-Class Postage Rising to 29 Cents : Mail: 4 hike OKd but called inadequate. Hefty increases approved for "junk," newspapers and magazines. The rates go into effect on Feb. 3.

January 23, 1991|MARLENE CIMONS | TIMES STAFF WRITER

WASHINGTON — Beginning Feb. 3, Americans will have to pay 29 cents to mail first-class letters, the U.S. Postal Service announced Tuesday.

As expected, the Postal Service Board of Governors approved a recommendation by the independent Postal Rate Commission to raise the present 25-cent cost of mailing a first-class letter by 4 cents. It will be the first increase in three years.

But its members did so "under protest," expressing concern that the rate will not generate enough revenue to ensure that the postal system breaks even. Last March, the Postal Service asked the commission to recommend a 30-cent rate.

Nevertheless, the governors adopted the pared-down increase, noting that further delays would result in potential losses of $20 million a day.

"With all of the financial pressures we are facing, we cannot afford to gamble on whether the rate commission has correctly estimated volume and revenue," Postmaster General Anthony M. Frank said at a news conference.

The 29-cent rate will apply to first-class letters weighing one ounce or less. The governors approved a rate of 23 cents for each additional ounce, up from 20 cents.

The price of sending a postcard will rise by 4 cents, increasing to 19 cents from the current 15 cents.

Even heftier postage increases were approved for third-class or "junk" bulk mail, second-class items such as newspapers and magazines, express mail and priority mail.

Frank called the new first-class rates "penny foolish," referring to the need for stamp buyers and sellers to use pennies in many transactions. The new postage stamp prices, he said, seem "designed to bring back the copper mining industry in Chile."

Also, the governors agreed in principle to allow the use of a 27-cent stamp on most bill-payment envelopes provided by utilities, department stores, insurance companies and similar firms.

The courtesy envelopes typically use bar codes and a ZIP code with an extra four digits to make processing easier, and the commission said that it believes that their use will justify the discounted first-class rate.

However, the board of governors decided to delay implementation of the 27-cent rate, saying that the public appeared to be confused by the discounted and regular first-class rates.

"If you use the wrong (stamp) on the wrong envelope, you're either paying too much or too little," Frank said.

In addition, the governors said that they believe the commission overstepped its authority in recommending the 27-cent rate. They asked the courts to review the proposal, saying that such classifications are the province of the Postal Service and not the rate-making commission.

"Charles Dickens would have relished this day," Frank said. "We're allowing the best of rates and the worst of rates."

For the average consumer, the new first-class letter rates will mean an estimated $8 to $10 a year in postage costs, the Postal Service said.

The overall increases will average 18%, with a 16% increase for first-class mail, compared with a boost of 25% on third-class mail, 22% on second class, 19% on priority mail and 15% on express mail, Postal Service officials said.

The rate hikes are intended to place a heavier burden on "junk" mailers, postal authorities said. It is the second time that the governors have increased third-class rates by a greater percentage than first class, they said.

Board of Governors Chairman Norma Pace said that increased efficiencies from automation and work force reductions through attrition have enabled the Postal Service to reduce its net loss for fiscal year 1990 from an expected $1.6 billion to $874 million.

Nevertheless, she said, a rate increase is needed to offset rising costs from operations, transportation, supplies, labor, health and retirement benefits during the two preceding years.

The commission estimated that the new rates would increase postal revenue by $6.2 billion annually, enabling the agency to break even, as required by law. The service no longer receives taxpayer subsidies.

Jeffrey L. Perlman, manager of legal and regulatory affairs for the U.S. Chamber of Commerce, said it "defies understanding" that increases could be imposed "during these difficult economic times" and when "the American public must live with a decline in postal service."

Moreover, he said, although "working people and businesses must hold down their costs when the balance sheet is in the red during hard times," the "monopolistic Postal Service has found an alternative. When labor costs become more and more unreasonable, it simply raises its rates and lets individuals and business suffer the pain."

Consumer advocate Ralph Nader complained that the Postal Service "is so full of waste, mismanagement, inefficiency and automation debacles that they're making the residential user pay the brunt of it."

Until 29-cent stamps can be mass-produced, the Postal Service has released two new stamps. The "F flower" stamp, which bears an illustration of a rose-colored tulip on a yellow background, is worth 29 cents.

A second stamp, worth 4 cents, can be used with existing 25-cent stamps. The second stamp reads: "This U.S. stamp, along with 25 of additional U.S. postage, is equivalent to the 'F' stamp rate."

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