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Stamp Prices May Be Going Up Next Year

January 04, 1997| From Associated Press

WASHINGTON — The post office seems likely to take the first steps this year toward raising stamp prices.

There's been no announcement. Indeed, Postmaster General Marvin T. Runyon Jr. said last month that the agency's 1996 profit "reinforces our commitment that there will be no general rate increase at least through 1997."

On the face of it, that was good news for mailers. But the one-year promise was quite a change from Runyon's speech earlier in the year in which he said: "We are going to do everything we can to keep stamp prices steady until the next century."

And an internal postal memorandum says that while Runyon does not want to raise rates next year, a decision will have to be made by this March, with a possible increase of "a penny or two."

In fact, the mailing industry expects the U.S. Postal Service to apply this year for a rate increase to take effect in 1998.

Business Mailers Review suggests a filing for a rate increase might not come until October if the post office has strong profits in the first half of this year.

"It's likely the service will propose a 35-cent stamp," the review speculated, a 3-cent increase from the current rate.

The current 32-cent first-class rate took effect on Jan. 1, 1995. Since then the post office has recorded record profits of $1.8 billion in fiscal 1995 and $1.6 billion in the fiscal year just ended.

But rising costs, which are projected to cut the profit to $100 million in 1997, could prompt concern about a return to red ink in 1998.

The two good years have allowed the postal service to reduce its outstanding debt by 19%, but the total is still $5.9 billion.

John Haldi, consultant to the Alliance of Nonprofit Mailers, explained that the Postal Rate Commission and the post office's governing board have agreed on the agency spending $963 million annually to reduce that debt.

If profits are less than that amount the agency misses its target and, "on that basis, I think they are going to need more money in '98. Even if they make $400 [million] or $500 million in '97, they will probably be in the red in '98," he said.

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