Rose Crispino remembers when you could mail a letter for a few pennies.

So the 69-year-old Lutherville resident finds it that much harder to digest the coming postal rate increase. The cost of a first-class stamp will jump to 37 cents tomorrow, a 3-cent increase that occurs 18 months after the last price increase.

"It's such a jump," Crispino said. "It used to be 2 cents at a time, and all of a sudden it's 3 cents. But you don't get the same service you used to. Everything takes longer now."

As the economy suffers and more people turn to the Internet to shop and send e-mail, the U.S. Postal Service continues to lose money. It lost $1.7 billion last year and expects to lose $1.5 billion this year, said Gerry Kreienkamp, a U.S. Postal Service spokesman.

Chief among the problems facing postal officials is that fewer people are using conventional mail. Burdened by a slumping economy, companies are cutting back on advertising through traditional "snail mail," partly because so many people have turned to online shopping.

Postal Service officials say the service expects to handle 6 billion fewer items this year than it did last year, when the post office delivered 207.5 billion pieces. That, combined with the terrorist attacks Sept. 11 and the subsequent anthrax-laced letter incidents, has cost the agency millions.

Despite the decreased mail volume, the post office's expenses continue to rise, with an average of 5,600 new delivery points every day. Because the Postal Service receives no funding from taxes, money from postage is its primary source of revenue.

"We don't like raising rates any more than people like having their rates raised," Kreienkamp said.

The rate increases mean the average person can expect to spend an additional 45 cents a month on mail, Kreienkamp said.

'Almost a vicious cycle'

Some residents predicted that the move will be counterproductive. "That's just going to cause me to look for even more ways to send stuff electronically," Carlton Haywood Jr., 26, said yesterday afternoon as he mailed a letter at the post office on Fayette Street. "I see their argument, but it just seems it will turn into almost a vicious cycle."

Crispino, who recently bought a book of 3-cent stamps so her 34-cent stamps don't go to waste, predicted that people without computers will be hit the hardest because they rely most on conventional mail.

Some say small businesses could suffer the most. The National Federation of Independent Business, which represents 600,000 businesses nationally, released a report this week that predicts the rate increases will cost small companies $1 billion collectively. The group defines small businesses as those with fewer than 100 employees.

"Large businesses will find other ways" to absorb the costs, said Andrew Langer, NFIB's manager of regulatory policy. "They can turn around and start using FedEx and bulk discounts. But then that shifts the costs to small businesses who can't."

"You have businesses that are trying to budget themselves, and unfortunately the postal increase throws off their projections midstream. What's more, our members can't readily find alternatives to use first-class mail. People like getting bills in their hands. There's only so much you can do with faxes and e-mails."

Businesses weigh in

Steve Braun, president of the Local Sales Consultants employment agency in the Inner Harbor, said he expects to spend $40 more on stamps for his business each month.

But "that's not the most troubling thing right now in the economy," he said.

Betsy Cerula, chief executive officer of AdNet/AccountNet Inc., said the increase will have a slight impact on the Columbia-based employment agency.

"We are a small business, and it's one more expense we have to deal with," she said. "The government says it's in support of small business and I don't see it. If the mail moved faster, I wouldn't mind paying 40 cents."

Stamps can be purchased online at www.usps.com/shop or by calling 1-800-STAMP-24.