Carl Grigel: Response to May 28 Guest Opinion by Harry Peck

2014-06-10T00:00:00Z 2014-06-11T10:31:15Z Carl Grigel: Response to May 28 Guest Opinion by Harry PeckBy Carl Grigel Special to the Arizona Daily Star Arizona Daily Star

It’s important that I provide some necessary facts in response to comments made by Harry Peck in the May 28 Arizona Daily Star regarding the U.S. Postal Service’s current financial situation.

First of all, to ensure a point glossed over quickly by Peck is made perfectly clear to your readers: The Postal Service receives NO tax dollars for its operations; all postal revenues come from the sales of postage and services.

Additionally, a key issue not discussed at all by Peck is the American public’s changing mailing habits. As the USPS announced on May 9, the Postal Service ended the second quarter of its 2014 fiscal year with a net loss of $1.9 billion, despite aggressive cost cutting.

While, as Peck asserts, the congressionally mandated prepayment of future retiree benefits is a major component of this loss, he fails to mention that first-class mail volume is continuing to decline rapidly. To be exact, first-class mail volume declined 4.1 percent in the second quarter (January to March 2014), a trend that is expected to continue in the future and serves as a major contributor to the Postal Service’s precarious financial position.

Peck and others have suggested that all the Postal Service needs from Congress is assistance with restructuring its retiree health benefit plan, but nothing could be further from the truth.

The Postal Service’s recent financial report indicated that its liabilities currently exceed its assets by $42 billion, and there is an immediate need for more than $10 billion to invest in new delivery vehicles and other needed equipment.

If legislation reduced the required retiree health benefit pre-funding payment, such action alone would not provide the Postal Service with any more cash to pay down its debt or invest in much needed capital.

Only comprehensive postal legislation that includes a smarter delivery schedule, greater control over personnel and benefit costs, and more flexibility in pricing and products will provide the Postal Service with necessary cash flows and more stable financial footing.

Carl Grigel is the Tucson postmaster. 

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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