Postal Service seeks rate hike

The Postal Service's proposal to raise the price of mailing a letter to 49 cents is sure to face scrutiny from lawmakers as a Senate panel considers bipartisan legislation to overhaul the cash-strapped agency.

Postmaster General Patrick Donahoe's appearance yesterday before the Senate Homeland Security and Governmental Affairs Committee comes one day after the post office said it wanted to raise the price of a first-class stamp by 3 cents. He's pressing lawmakers to act quickly on legislation to fix his agency, which expects to lose $6 billion this year.

The Postal Service's board of governors, in its rate-hike request, cited the agency's "precarious financial condition" and the uncertain prospects for postal overhaul legislation in Congress.

last resort

"Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges," the board's chairman, Mickey Barnett, wrote customers.

The rate proposal must be approved by the independent Postal Regulatory Commission. If the commission accepts it, the increase would become effective January 26.

Under federal law, the post office cannot raise its prices more than the rate of inflation unless it gets approval from the commission. In seeking the increase, Barnett cited "extraordinary and exceptional circumstances which have contributed to continued financial losses" by the agency.