The U.S. Postal Service will seek financial aid from Congress to offset anthrax-related expenses and a general slowdown in mail volume. The request for aid, supported by the industry, came as two Washington, DC-area facilities were shut as part of a contamination investigation and two postal workers deaths were likely liked to anthrax disease.
Postmaster General John Potter told NBC’s “Today” show that while the USPS was not a business, he would be asking for relief as the airlines and insurance companies had after the devastating effects of the Sept. 11 terrorist attacks, according to reports.
The amount of aid and the time frame in which the USPS may receive funding is unclear. The post office has already requested more than $61 million to defray the damage done to the Church Street Station in New York City, located near the World Trade Center.
Congress is out of session until Tuesday while the Senate and House office buildings are inspected for anthrax contamination. The buildings were closed last Wednesday, after Senate Majority Leader Tom Daschale’s office received a letter containing anthrax.
Industry experts applauded Potter’s pending request for aid.
“We think that with the increased security and changes that are being required, the postal service should look to try and get some help from Congress,” said Jerry Cerasale, the Direct Marketing Association’s senior vice president, government affairs.
Cerasale was not confident about immediate action, however. Asked about a possible timetable for congressional aid, he advised the industry to “Look at the airlines,” he said. “It’s not going to be done instantaneously.”
It may not be necessary at all. “A lot of the costs that have been incurred as a result of this have been one-time costs, and they may be offset by appropriations,” said Lou Mastria, the DMA’s director of public and international affairs.
But if the request for appropriations is turned down, or the costs exceed what the post office receives, the option is there to update the rate case in the next few months.
“It’s really too early to tell,” about the need to amend the rate case as a result of the current situation, Mastria said. He did not see anthrax in the mail continuing to be a long-term threat.
Others hoped that the aid would replace the upcoming postal rate increase.
“You have already had two increases, and mail volume has been declining,” said Gene Del Polito, president of the Association for Postal Commerce, referring to the upcoming rate case. “To impose an increase on top of that makes no sense whatsoever. It does makes sense to ask for enough [aid] to make the next increase unnecessary.”
Congress is going to expect [the USPS] to introduce additional security measures that will increase the cost of mail,” he added.
Del Polito thinks the additional funds should amount to at least what the post office was asking in its current rate case. “If he is asking for less than $6 or $7 billion then it is not going to do them a damned bit of good,” he said.
The postal service has been affected on a number of fronts. Service disruptions caused by the attacks on the Twin Towers and the Pentagon, the alarm over anthrax spores being mailed and numerous false alarms have strained the financial resources of the service.
Even before Sept. 11, the post office had been facing a $1.65 billion deficit. While it is not allowed to make a profit, it is required to break even on its operations.
A Brentwood, MD processing and distribution facility and a postal center near Washington-Baltimore International airport have been closed since Sunday. Employees have been reassigned to other sites.
Two employees at the Brentwood site have contacted inhalation anthrax. At least one of those employees is seriously ill. Two more employees at the same facility have died of symptoms consistent with the disease, according to news reports. All 2,000 employees at the Brentwood location and 150 at the postal center are undergoing testing and are being given preventive antibiotics.
Preliminary contamination tests at the two facilities have been negative. But the facilities, along with one in Hamilton, NJ where a mail carrier was diagnosed with coetaneous anthrax, and another in West Trenton where preliminary tests have been negative, remain closed.
There is the possibility that the economic impact of the current situation may be beyond the rate case before the Postal Rate Commission. According to Steve Sharfman, general counsel to the PRC, current rate requests will be applied to the 2003 fiscal year, which will start on Oct. 1, 2002.
Furthermore, the post office is allowed to recover only one-ninth of the losses incurred during a given year, Sharfman said.
“To put that in context, the postal service is requesting annual revenue of $73 billion,” Sharfman said. Assuming $10 million in cleanup or unforeseen shipping or processing costs. “An additional million dollars of expense would not make a noticeable difference in their rate request,” he said.
