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Panel wants to close rural post offices, deregulate rates

By Associated Press
© St. Petersburg Times
published July 17, 2003

WASHINGTON - Money-losing post offices, many in small towns, could be closed under the recommendations of a presidential commission that sees a better future for mail services offered in shopping malls, banks and grocery stores.

The commission also wants more freedom for the post office to change rates.

It rejects the idea of making it a private company.

The final report of the President's Commission on the United States Postal Service, formed by President Bush to study the agency and make recommendations for its future, is scheduled by the end of the month.

The commission began voting on its recommendations Wednesday, approving several that could have far-reaching impact on virtually all Americans if accepted by Congress and the president.

Likely to generate controversy is a proposal to create a special commission to study the postal network and recommend closings and consolidations of mail processing and distribution facilities. The panel also asked Congress to lift restrictions on closing local post offices.

"You don't necessarily need post offices; you need postal services delivered in the most convenient way," said commission co-chairman Harry J. Pearce, chairman of Hughes Electronics Corp.

Kiosks offering a wide range of mail services are being opened in shopping malls, Pearce noted, and postal services can also be made available in grocery stores, banks and other locations.

In many communities the post office owns valuable, centrally located real estate that could be sold to raise income, the commission noted. In other towns, where the post office has been a center of activity, the agency might donate the facility to the local government for use as a community center or town hall.

The commission wants to see maximum local input in the final decision on each office, commented co-chairman James A. Johnson, vice chairman of the merchant banking firm Perseus, L.L.C.

With some 35,000 offices across the country the Postal Service has long sought to close offices it considers unnecessary, but has often been thwarted by Congress when communities complained that keeping their post offices was vital.

With that in mind, the commission suggested that when a set of national recommendations is prepared for closings and consolidations, it take effect unless rejected in its entirety by Congress within 45 days.

Many of the recommendations from the commission are similar to provisions in a bill sponsored by Rep. John McHugh, R-N.Y., said McHugh's chief of staff, Robert Taub. Things that were not in the bill, such as the facilities closings, will also be given a close look, Taub said.

Neal Denton of the Alliance of Nonprofit Mailers, a trade group, said he expected the report to get a warm reception in Congress.

A recommendation for more flexibility in setting rates is something the post office has sought for years, complaining often that the current process is too slow and cumbersome.

Under the commission plan an independent agency would establish rate ceilings with postal management able to change rates below that level to meet market needs and compete with other delivery services.

"If any business in America had to operate under the constraints of the rate-setting process, it would be out of business," Pearce said.

The commission said rates should be raised as seldom as possible.

And it said rates for services such as first-class mail, where the post office has a monopoly, should not be allowed to subsidize rates for items like overnight mail and parcel delivery where the agency competes with other businesses.

The post office suffered a loss of $676-million last year and is hoping to end this year about $600-million in the black. But the agency, which does not receive taxpayer money for operations, has suffered a decline in mail volume two years in a row for the first time amid a weak economy, the terrorist attacks and increasing electronic commerce.

Elimination of the postal monopoly and privatization of the post office have also been suggested. The commission turned down both ideas, though it said the agency should have a new, corporatelike board of directors to govern it.

Postal vice president and chief financial officer Richard J. Strasser didn't comment directly on the recommendations, but lauded the commission.

"One has to be really impressed with the depth and quality of the recommendations they have put together," he said.

Wednesday's recommendations did not address the postal work force, though that is expected to be in the final report.

Pearce commented after the meeting that the work force needs to be "right-sized" in the face of automation and consolidation.

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