The U.S. Postal Rate Commission cleared the way yesterday for the U.S. Postal Board of Governors to raise the cost of mailing a letter from 18 cents to 20 cents next Tuesday. Higher rates then could go into effect as early as Oct. 2.
Although the independent rate commission said in a decision released yesterday that the first class postage rate should remain 18 cents, the postal governors, who have the final say on rate matters, now can reject the rate commission's recommendation legally and unilaterally increase first class postage by two cents as well as raise other rates. The governors' decision to modify the rate commission recommendation must be unanimous.
The U.S. Postal Service had no comment on the rate commission's decision. However, Postmaster General William F. Bolger has said that if the Postal Service weren't granted the 20-cent rate, he would file for a first class rate of 22 or 23 cents.
The governors had wanted to increase postage rates to 20 cents in June but were told by their attorneys that to avoid legal problems, they had to reject the proposal for a second time and send it back to the commission. The governors then would be free to change the commission's final proposals if commissioners again rejected the plan for a 20-cent rate.
If the governors vote next Tuesday to raise postage rates, as postal observers expect they will, it will be at least 10 days before the new rates could go into effect. If a new postage rate is approved, the Postal Service will issue an interim stamp marked with a letter of the alphabet, similar to the B stamps issued when the 18-cent rate took effect, and accepted at the new first class rate until enough stamps carrying the new first class rate can be produced, a postal spokesman said yesterday.
The other options open to the governors are accepting the 18-cent-rate structure, rejecting it, sending it back to the commission for review or ordering the Postal Service to prepare a new rate case.
The governors previously had argued that a 20-cent first class rate was necessary for the Postal Service to break even and that the rate commission's accounting of Postal Service revenues and costs was faulty. The rate commission noted in its decision yesterday that a postal deficit will not occur this year although Congress has reduced the Postal Service's appropriations and the quasi-government operation recently increased its employes' wages and benefits in settling a labor dispute.
The Postal Service is expected by law to break even, and rates are supposed to be set to cover costs without generating a profit.
The board of governors had predicted that, without the increased rates, the Postal Service would incur a $600 million deficit. However, the commission said that deficit isn't likely, and it rejected several of the Postal Service's accounting methods.
The commission's decision was signed by acting Chair Janet D. Steiger and Commissioners Clyde S. DuPont and Simeon Bright. Commissioner James H. Duffy dissented, saying that if the 18-cent rate were continued, the Postal Service would have a revenue shortfall of $1.5 billion and a $600 million deficit during the first year of the rates.
The Postal Service's request for a rate increase was filed in April 1980. Last January the rate commission rejected the Postal Service's request for a 20-cent rate and recommended the 18-cent rate. In February the board of governors, saying that the Postal Service needed a 20-cent rate for first class mail, accepted the rate commission's proposal under protest and told the commission to review the decision. Yesterday's ruling was the commission's third rejection of the 20-cent rate.