Publisher's corner: Postal rate increase aimed at newspapers
Everyone has heard the old saying about death and taxes. The same also seems to apply to postal rates.
When the United States Postal Service announced in May of this year that it planned to raise rates again, public reaction was, "Didn't we just do that? Yep. Just last January.
But the Internet has hit Uncle Sam's mail system in the pocketbook. While there are ever more households in America, there are ever fewer first-class letters.
We should expect an increase a year, for a while, experts say. The postal service has to make a lot of changes to survive into this millennium.
But that is then. This is now. And there are some real problems with this postage increase.
For one, along with the announcement of the plans for a 42 cent stamp next year, was a quieter pronouncement that prices Uncle Sam plans to charge to bring this newspaper to some of our subscribers in the mail could go up by nearly 30 percent.
That is a huge hike. And why do they want to do that? Not because of the cost of processing and transportation, since newspapers like ours deliver newspapers to the post offices ourselves. Not because of changes in the way we prepare the mail.
The National Newspaper Association says the basis for the postal service increase is flawed. The NNA plans to fight it at the Postal Rate Commission.
Obviously, we aren't too happy about this. We don't like to increase subscription prices by 30 percent, and our readers surely do not like to pay them. Paper and fuel go up for us, too, and all of that is bad news in a town where the newspaper brings information that doesn't get to you any other way.
Another problem is that Congress hasn't yet been able to pass a bill that stops overpayments from the USPS pension system from flowing over into the general federal budget. The Bush administration likes the extra money and wants to keep it. But this is like a tax refund. It should be given back to us, the public.
Finally, USPS has announced it will create a 'forever' stamp next year, with which you could pay your 42 cent postage for a letter. This has led some people to erroneously assume that they can buy a lifetime's supply of Forever stamps, and mail letters for 42 cents "forever." But the Postal Service hasn't yet explained how they will work. We doubt it intends to create a lifetime stamp supply with no price increases. We could see the black market developing over this. ("Hey, buddy, wanna buy a Forever stamp?")
Most people take the postal service for granted sometimes. Congress thankfully shrugged off most of the responsibility for it in 1970 by setting up independent regulatory bodies. But the public still owns this organization, and our members of Congress ultimately represent the shareholders, which is everyone who is a citizen. It's time to remind them to pay attention to this situation again.
For those of you that do live in the county and receive your Emery County Progress by mail here are some interesting things you should know.
In-county is a subclass of periodicals mail. It was created by Congress in 1845 to encourage expansion of newspapers into the frontier, and to counter strong effects of the growing New York papers.
Before Rural Free Delivery, in-county newspapers were mailed free to readers who called at the office for their mail. Gradually, postage was applied by Congress, but in-county newspapers kept some types of free distribution until 1962.
In 1970, Congress ended all direct subsidies and required all mail to begin to pay its own direct and indirect costs. For reduced rate mail, a 16 year phasing began. In 1986, full attributable costs were reflected in rates. In 1993, in county was also required to contribute to USPS overhead, at a rate of 50 percent the level of regular rate periodicals.
Even with work sharing discounts, most in county publishers have experienced rate increases in excess of 1,500 percent since Postal Reorganization Act was passed.
Most in county mail consists of newspapers. NNA members' mail volume accounts for about 65 percent of the total. Other periodicals in the subclass are city magazines, newsletters and church bulletins. If they are not primarily distributed within their county or have a circulation greater than 10,000, they are not eligible.
The typical in county paper is a weekly--family-owned and independently operated. Many are rural, but cities and suburbs also often have in-county papers.
Today, the importance of in-county mail is its subclass status. Because nearly 60 percent of the mail is carrier route sorted and either entered directly at a delivery office or hauled short distances by USPS, its cost to USPS is low. By not having its costs averaged together with more costly national mail, in-county benefits readers by holding down the postage cost that drives subscription rates. Most years, it also contributes a profit to USPS.
In-county mail is less than one percent of domestic mail volume with about 750 million pieces per year. But it represents the local community voice that is critical to many towns, as well as to ethnic and urban communities within larger cities.
So what about the new increase? Here is some of what could happen.
The Postal Service is seeking an increase in periodicals postage, along with increases in all other mail classes, including the 42 cent stamp. For in-county periodicals, the increase averages about 25 percent. Some newspapers report an impact more than 30 percent.
The Postal Rate Commission must approve the increase before it goes into effect. That approval requires a 10-month-long proceeding in which the Postal Service's costs and the rationale for its approval are litigated like a formal court trial.
After the Commission acts, the USPS governors--a presidentially appointed body--has the final decision. Their action to raise rates would probably be in April/May 2007. The new rates would then be in effect between May and July, 2007.
The proposed increase is larger than usual. One reason is that Congress and the Bush administration didn't resolve a dispute over excess payments into a civil service pension fund. Mailers say the money should be given back to mailers with lower prices. The Bush administration counts overpayments against the federal deficit and disagrees. Congress is trying to compromise by diverting most of this overpayment to pre-fund retirees' health benefits--which mailers will eventually have to fund anyway. A battle over whether USPS or the general budget should pay for postal employees' military pensions--at a lifetime cost of about $27 billion--also remains in dispute.
Fuel cost increases, and the gradual loss of profitable first-class mail by the Postal Service are also factors in the increase for some mail.
Finally, USPS is preparing for a massive new automation program. It wants to change commercial mail rates to encourage "more efficient mail," which to many means to force mailers to design their mail to fit the sorting machines--and if they can't, to drop out of the mail altogether. This battle begins in earnest with this case, where charges are partially based upon the shape of a mailpiece. For newspapers, this is bad news, since redesign of the web-printed paper to be a more convenient size is out of the question.
For in-county mail, the problems are even more complex. After a decade of producing modest profits for USPS, in-county newspapers suddenly are "losing money" for the Postal Service, according to its experts. But newspaper mail hasn't changed much, and isn't using USPS processing and transportation heavily, where fuel and other costs would be a factor. The culprit in the seeming financial drain is increasing unreliability in the statistical sampling USPS uses to estimate in-county costs. The National Newspaper Association will dispute the sampling errors before the PRC, which is the only body empowered to act right now.
An increase in postal rates would cause us to raise the subscription prices for all customers, not just for those that are mailed, for those picking them up at the store as well.
Ultimately, however, Congress will need to weigh in. While it cannot "stop the rate increase," as most would prefer, in-county newspapers are in the mail because Congress has required USPS to accommodate them. Left to their own devices, the efficiency experts at USPS will squeeze newspapers out of the mail in the coming decade, which could mean the end of one of the ways we get the paper to our customers.