The Postal Service is freezing new
construction and leasing for hundreds of planned projects across
the country, saying the agency is facing serious financial losses.
The announcement Thursday was accompanied by a warning from the
postal governing board that universal service to every home every
day could be in danger without changes to the laws that regulate
More than 800 planned projects in all states will be affected by
the freeze. Postal officials didn't provide a dollar estimate for
the affected work.
While first class mail went up a penny to 34 cents in January,
several increases in other types of mail that had been sought by
the agency were rejected or trimmed by the independent Postal Rate
Commission. With rising costs, postal officials now say they face a
$2 billion to $3 billion loss this fiscal year. They are planning
to apply this summer for another rate increase to take effect next
After five years in the black the post office had a $199 million
loss last fiscal year.
Among the problems cited by the Postal Service are wage rate
increases that exceed the rate of inflation, escalating fuel costs,
changes in the type of mail being processed, a communications
marketplace marked by increased competition and forecasts calling
for the diversion of some first-class mail to electronic
The construction and leasing freeze affects facilities that the
agency has made commitments to but where construction has not yet
"All new construction, new leasing and expansion planned for
2001 is frozen," postal spokeswoman Judy de Torok said.
The projects already under way won't be halted, she added, and a
few planned projects will continue if needed for health and safety
Meanwhile, the universal service that Americans take for granted
could be in jeopardy unless laws regulating operations are changed,
said the postal governing board.
"Regrettably, our call for an additional rate increase,
following so soon after the last one, reflects the fact that the
30-year-old statutory model that governs the Postal Service is in
need of change to protect universal service at affordable rates,"
said board chairman Robert F. Rider.
For the past several years postal leaders have sought changes in
the law to give them more flexibility in changing rates and
services to cope with rising costs and changes in competition.
Under current rules it takes nearly a year to change rates.
Long negotiations and hearings produced a bill they felt would
solve many of their problems last year, but the measure never came
up for a vote and died with the end of the last Congress in
Feeling increased financial problems, the postal governors this
week asked the Rate Commission to reconsider the changes it made in
They also sent a letter to President Bush seeking his assistance
in getting legislation to provide them more freedom to operate.
Universal service to every address at uniform and affordable
rates has been a requirement since the founding of the nation. For
years Congress subsidized the service, but when the current system
was created in the 1970s the subsidies were phased out, and the
post office no longer receives taxpayer money for its operations.