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Postal Board Rejects Penny Increase in 1st-Class Stamp : Mails: Postmaster general had sought hike from 29 cents. He expects no change until 1994.


WASHINGTON — Postmaster General Anthony M. Frank's 20-month quest for a 30-cent first-class postage stamp ended in defeat Tuesday when the Postal Service's board of governors refused to raise the basic rate from 29 cents.

Six of the nine governors voted to approve the proposed "correction" in the cost of mailing a first-class letter, but the 1970 law that mandated the present pay-as-you-go Postal Service system requires a unanimous vote to raise rates.

In a separate vote, the board unanimously rejected a complicated proposal that would have left the basic letter rate at 29 cents while raising other postal rates. The plan was devised by the Postal Rate Commission, an independent body that proposes rate schedules for consideration by the board of governors. The governors can approve or disapprove commission proposals, but cannot amend them.

The rejected proposal was turned down on grounds that it would have raised only $333 million a year, far short of the $800 million boost that Frank has said is needed for the service to break even over the next few years.

Frank initially had sought a 30-cent first-class rate in March, 1990, when the basic rate was still 25 cents. He said that the nickel hike would have permitted the Postal Service to operate for four years without another increase, and perhaps manage with only one additional increase before the turn of the century.

Instead, the Postal Rate Commission approved a 4-cent increase in January, 1991. The board of governors, while protesting that the increase was inadequate, nevertheless let the 29-cent first-class rate go into effect last February.

As a result of Tuesday's action, the past pattern of raising rates about every three years will continue, Frank said at a news conference.

"If we'd gotten that 30 cents, I believe . . . that we would have had only one more rate increase this decade or this century. That is no longer possible," Frank said. "But I think we're back on a three-year cycle, which is not bad. We can be looking for a postage rate increase in January or February of 1994."

Pressed by reporters to speculate on how large the next rate hike will be, Frank suggested an increase of 3 to 5 cents, which he said would be roughly in line with a probable rate of inflation of about 4% a year.

Norma Pace, chairman of the board of governors, strongly endorsed Frank's request for a penny rate increase now, citing his estimate that the added revenue would produce $800 million a year. That amount, if added to the $600 million net profit that the postal service is expected to make in the current fiscal year, would have provided enough cushion for the system to break even over the four-year cycle ending in early 1995, Pace and Frank said.

Without the increase, they said, this year's $600-million profit may not be enough to prevent the postal system from sliding into red ink for the three years ending in early 1994.

Pace said that the three governors who voted against the rate increase--Tirso del Junco of Los Angeles; Susan E. Alvarado of Alexandria, Va., and Bert H. Mackie of Enid, Okla.--vetoed the increase because of the current "economic stagnation."

Both Pace and Frank strongly criticized the cumbersome process currently used to set postal rates. The procedure, mandated by Congress in 1970, invariably has taken 18 to 20 months. They said the governors and the Postal Rate Commission had agreed to set up a study commission to devise a more streamlined procedure.

The separate rate schedule proposed by the commission but rejected by the governors would have affected third-class postage, express mail and first-class rates beyond the first ounce, which would have remained at 29 cents.

The Postal Rate Commission's range of proposals, together with its refusal early this year to recommend a 30-cent stamp, were a "mistake," Frank said bluntly. "The bulk of the American people wanted it higher. They wanted it 30 cents."

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