Postal Service to halt new construction

Neither rain, nor sleet, nor snow threatens the delivery of mail, but the potential loss of billions of dollars does. With $2 billion to $3 billion in losses projected this fiscal year, the Postal Service announced March 8 that it would halt new construction, leasing and expansion projects for the year. More than 800 projects are affected, for a savings totaling $1 billion. The move was mandated by the Postal Service's board of governors, which asked the agency in February to cut the fiscal 2001 capital improvements budget from $3.6 billion to $2.6 billion. "Management is continually looking for ways to reduce costs," said Postal Service spokesperson Judy de Torok. "The board has also directed us to find ways to reduce work years without impacting service. We anticipate there will be other actions too." One of those actions will likely be a new rate case, one proposing a 10 to 15 percent increase in postage. A case could be filed with the Postal Rate Commission this summer. The board is also trying to get the most recent rate hike, which went into effect Jan. 7, changed. The rate commission instituted a 4.6 percent across-the-board hike. The governors want a 6 percent increase. Large mailer groups hoping to stave off another rate hike are assaulting Capitol Hill in a massive lobbying effort to get members of Congress engaged on the issue. "We don't think they'll need to raise rates at all if they do what they are suggesting in cutting costs," said James Cregan, executive vice president for government affairs at the Magazine Publishers of America. "They may think this is some kind of clever political strategy to get reform on the agenda, but they could be shooting themselves in the foot and the head by going down this road." Since December, the board of governors and Postal Service executives have tried to increase public awareness of the agency's potential financial crisis. In doing so, they hope to gain support for legislative reform. Postal Service officials don't think they have enough flexibility to respond to an ever-changing marketplace. "One of the reasons why we wanted people to be familiar with the construction halt is so we get the conversation and dialogue on reform started," de Torok said. "While USPS employees have done a great job, the system is broken." For a list of projects affected by the cuts, click here.