Despite a recent postal rate increase, the United States Postal Service has frozen its capital spending to limit financial losses. Officials said they do not expect an immediate impact to mail delivery.
With rising costs exceeding the growth of mail volume and revenue growth, the Postal Service could lose between $2 to 3 billion this fiscal year.
“The Postal Service is taking a number of steps to reduce the effect of the budget problems,” said Bob Groff, a public affairs officer for the U.S. Postal Service. “One is the nationwide freeze on capital spending.”
The Postal Service Board of Governors requested the capital spending freeze March 8 for construction projects scheduled for 2001 but not yet under contract. More than 800 postal building projects are affected nationally. Locally, the planned Branford Carrier Annex, along with two other post offices in Connecticut scheduled for repairs, are all on hold.
“We will validate any contracts that have already been signed,” U.S. Postal Service spokeswoman Christine Dugas said. “If the contract is not signed, then it is automatically going to be reviewed.”
Despite construction delays, mail delivery should continue normally for the time being.
“Any time that you have overcrowded facilities, it impacts service,” Dugas said. “But I don’t see any disruptions to service in the near future.”
Wage increases that exceed the rate of inflation, rising fuel costs and the diversion of first-class mail to e-mail have all contributed to the financial woes of the postal service.
In response to budgetary constraints, the postal service plans to request a postage rate increase of 10 to 15 percent this summer, and officials are investigating further cost reductions besides the capital spending freeze.
The new rate hike would follow a Feb. 1 increase, which raised the cost of mailing a 1-ounce letter to 34 cents.
“Our call for an additional rate increase, following so soon after the last one, reflects the fact that the 30-year-old statutory model that governs the postal service is in need of change to protect universal service at affordable rates,” Board Chairman Robert F. Rider said.
Since its inception in 1775, with Benjamin Franklin serving as the first postmaster general, the U.S. Postal Service has made it a priority to deliver mail at uniform and affordable rates.
Following a March 7 strategic planning meeting, the Postal Service Board of Governors warned that universal mail service would be at risk without reform of the legislation governing the U.S. Postal Service. Officials want to be able to adjust postal rates faster than they are currently able, in immediate reaction to market fluctuations.