Washington Postal Scene — By Bill McAllister
The Trump administration has formally declared the United States Postal Service a financial wreck, but its plan for ending the agency’s billion dollar deficits is certain to create controversy.
In its proposed budget for fiscal 2019, the administration endorses a plan that calls for a one-time special postage rate increase, an end to Saturday mail deliveries and a new rate-setting procedure — all to give the agency more money.
The plan released Feb. 12 includes a plea to the USPS to pay more attention to “the cost of personnel” and to “take appropriate actions to balance service levels with revenue.”
The budget states that the Postal Service’s business model, which depends on first-class mail revenue to support its operations, has been “fundamentally undermined” by the revolution in digital communications.
To survive, the USPS must better manage its expenses and secure more revenues, the budget proposal says.
Some of the actions recommended by the administration are not new and have been ignored by Congress, but the idea to trim postal worker benefits, along with those of other federal workers, is certain to anger postal unions.
Until now, postal worker pay has been set largely as a result of negotiations between the unions and Postal Service management.
But Trump’s proposed budget declares that Postal Service employees and retirees should be under government-wide changes to health and pension plans. This step would help save USPS funds by reducing the agency’s contributions to health and insurance plans, the budget says.
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Trump’s fiscal 2019 budget would freeze pay for most civilian government workers and begin to move them toward a plan where pay raises would be based on individual job performance not seniority.
The administration has made clear it would like to move away from defined benefit pension plans and toward retirement plans that are based on employee contributions.
The budget claims its proposed steps could boost the Postal Service’s financial position by $45 billion over the next 10 years and would allow the USPS to resume making its required $5 billion a year payments for its retiree health plans. The Postal Service began skipping those payments in 2012.
The USPS should be able pay those back bills “with business revenue … rather than a taxpayer-financed bailout,” the budget proposal says.
Fredric Rolando, president of the National Association of Letter Carriers, promised to fight the Trump budget proposals.
“The administration is once again targeting the Postal Service for service reductions and calling for pension and health insurance cuts for postal and federal employees — all to pay for last year’s corporate tax giveaways,” he said in a message posted on the union’s website.
“These proposals are outrageous and we will resist them with all our might,” Rolando said.
The Postal Service has tried for years to win Congressional approval of ending Saturday deliveries, a plan that had the backing of the Obama administration. But lawmakers have been opposed to the idea and declared it “dead on arrival” with previous budgets.
The Trump proposal would allow the USPS an end to six-day-a-week mail deliveries “where there is a business case for doing so.”
It also urges approval of Postal Service plans to move toward “centralized and curbside delivery where appropriate.”
The budget urges approval of a “rate setting system” that would “provide enough flexibility to ensure both the stability of postal operations and the ability of the Postal Service to meet their statutory obligations for retiree health and pension costs.”
Postal Service spokesman David Partenheimer responded on behalf of the agency.
“The Postal Service appreciates that the president’s proposed 2019 budget recognizes the need to enact postal legislative and regulatory reform,” Partenheimer said.
“As the budget proposal correctly notes, both are essential to restoring solvency to the Postal Service and to ensuring that we can fund our existing commitments from business revenues.”
Stephen Kearney, executive director of the Alliance of Nonprofit Mailers, said that the Trump “operational reforms” for the USPS are mostly consumer “rate increases masquerading as ‘reform.’ ”
Michael Plunkett, president of the Association for Postal Commerce, views the Trump proposal as “a helpful sign that the Postal Service is among the administration’s priorities,” but added that “profound changes like the elimination of Saturday delivery require careful analysis and would best be considered as part of a more comprehensive approach to the Postal Service’s needs.”