Historic postal reform bill becomes law

December 20, 2006 was a big day for the USPS. They delivered over 900 million pieces of mail, making it the busiest day of the year. That same day, President Bush signed into law the first major overhaul of the USPS since 1971. The Postal Accountability and Enhancement Act will modernize the U.S. Postal Service. It links future rate hikes to the Consumer Price Index. This will benefit residential and business customers by insuring more predictable price increases.

Another provision of the legislation will free up over 30 billion dollars from a pension escrow account. The USPS had been required by law to fund military pensions for their retiring employees who had served in the military. Under the new bill, that obligation will be funded by the Treasury Department. This release of escrow funds will help offset the need for rate increases in the years to come.

“This legislation will reverse the death spiral at the Postal Service and bring it into the 21st century.”

This law is the culmination of a 12- year effort by Congress to overhaul the postal service. “This landmark legislation solves the structural, legal and financial constraints that have brought the Postal Service to the brink of utter breakdown,” said Representative Tom Davis of Virginia. Davis helped broker the bill.“ This legislation will reverse the death spiral at the Postal Service and bring it into the 21st century. It’s a huge win for everyone who uses stamps.”

This new legislation gives the postal service some defined direction. They are to concentrate on what they do best…processing and delivering mail. It changes the way the USPS prices its products and services.

They will be allowed to change prices whenever needed, just like a business. But the legislation also requires that price increases will be kept below an inflation-based ceiling. They’ll also have the freedom to introduce new products and services to better meet the needs of customers. It will give them the flexibility to offer and price these products at competitive rates. The new law enables the USPS to continue its transformation efforts and cost-cutting measures.

The current rate case that is under consideration by the Board of Governors, will proceed as scheduled. Whether the new legislation will have any effect on the proposed rates remains to be seen. The new rates and rules will likely take effect in May of 2007.

For more information regarding the 2007 Rate Case, sign up for monthly email updates at www.ammailing.com. Also, attend the Postal Rate Seminar sponsored by A.M. Mailing Services, LLC It will be held at Olympia Resort in Oconomowoc, Wisconsin on Wednesday, April 11th. For more details and registration, call 608-884-3452.