The independent Postal Rate Commission today is expected to recommend that the U.S. Postal Service raise the cost of a first-class stamp to 22 cents from 20 cents, industry sources said yesterday. The higher rate could begin as early as next February.
A 22-cent stamp would generate about $700 million less in revenue than the 23-cent stamp requested by the U.S. Postal Service last November when it filed its request for a general rate increase for all classes of mail.
The Postal Rate Commission is scheduled to release its recommendation this afternoon at a news conference. It was not known yesterday whether the commission also would recommend raising the cost of a post card or how other classes of mail would be affected.
The Postal Service board of governors, which oversees the Postal Service, decides when a rate increase is necessary and asks the independent, five-member commission to investigate.
The commission has held a series of hearings on the Postal Service's rate proposal. The board of governors, composed of nine presidential appointees, the postmaster general and his deputy, could take up the matter Monday when it holds its monthly two-day meeting here.
The governors can accept the recommendation, ask the commission to reconsider it or permit the rate change to take effect under protest. In the latter event, the board would put the 22-cent rate into effect and then seek "judicial review" of the commission's recommendation in the federal courts.
The board can modify the commission's request and put a higher stamp rate into effect only by unanimous vote, which most observers said yesterday would be unlikely. Board members have been sharply divided over the need for an increase. In November, the board voted 5 to 4 to ask for the increase, the first time that a board was so split about a rate request.
Postmaster General William F. Bolger has said that the Postal Service needs to generate $3.2 billion more than it could get under current rates to break even in fiscal 1985. In making that case, the Postal Service predicted that it would lose nearly $800 million in the fiscal year ending Sept. 30. But some board members and other postal observers contend that the Postal Service will break even or earn $200 million this year.
Van H. Seagraves, publisher of Business Mailers Review, an authoritative trade publication, yesterday predicted that the Postal Service will record a small surplus this fiscal year based on the Postal Service's current revenue receipts.
The cost of mailing a letter last was increased in November 1981 when it went from 18 to 20 cents. Since then, the Postal Service has posted surpluses: $802 million in fiscal 1982, and $616 million in fiscal 1983.
When the Postal Service began operating 13 years ago, as a quasi-public corporation replacing the Post Office Department, the price of a first-class stamp was 8 cents. In that same span, the annual federal subsidy of postal rates has dropped from about $920 million to nothing.
Bolger and his deputy, Jim Finch, both ex-offico board of governors members, cast the critical votes last year in favor of asking the commission for a rate hike. By law, they cannot vote on a final board recommendation. Even so, many observers believe that a 22-cent increase will be approved by the board based on the commission's recommendation and findings.
The rate request set off an intense battle between direct-mail advertisers, which use third-class mail, and newspaper and magazine publishers, which fall under second-class mail rates. The Postal Service originally recommended an increase in third-class mail rates of about 21 percent and a 12 percent increase in second-class rates.
The American Newspaper Publishers Association argued that mailers should be charged more, in part because "unfairly" low postal rates keep advertisers from paying newspapers to deliver prepackaged advertising, known in the trade as "stuffers."