Postage increase effective Sunday

THE BALTIMORE SUN

Get those 2-cent stamps ready.

Starting Sunday, the price of a U.S. Postal Service first-class stamp will rise to 39 cents, the first rate increase since June 2002.

The move is part of an across-the-board increase, averaging 5 percent, that will affect the cost of almost all domestic mail delivery and services. It includes bulk, priority and express mail, and delivery confirmation, return receipt and certified mail services. International rates will go up about 6 percent.

Unlike previous increases associated with rising operating costs, revenue from the domestic price jump will go toward a $3.1 billion escrow account as required by law, according to the Postal Service.

For many consumers who pay bills or send holiday cards through the mail, the increase is simply an inconvenience. But for companies that rely on bulk mail and other services, the jump will increase the cost of doing business.

Customers at Millennium Marketing Solutions, a printing and marketing company in Annapolis Junction, typically pay for postage costs. Millennium's owner and president, Janice Tippett, expects clients will cut back on services to make up for the higher mailing bill.

"It's going to adversely affect me," Tippett said.

The Postal Service, which relies on revenue from mail services and products to operate, has been fighting a steady decline in first-class mail volume as competition from private carriers such as UPS and FedEx increases and more people use the Internet to pay bills. In fiscal year 2005, the volume of bulk mail for the first time exceeded that of first-class mail, which makes up more than half of the Postal Service's revenue.

The rate for sending a postcard will increase a penny, to 24 cents, while priority mail will cost $4.05 for a pound, up from $3.85. Express mail rates will climb to $14.40 from $13.65 for a half-pound, and to $18.80 from $17.85 for up to 2 pounds.

In preparing for the change, post offices in Maryland and across the country are informing customers of the increase, putting up posters and stocking vending machines with the new 39-cent stamps. More than 2.5 billion "make-up" 2-cent stamps have been produced, the postal service said.

Still, many customers who dropped by the Columbia post office last week were unaware of the increase.

John Moore of Clarksville said he won't mind paying 2 cents more for a first-class stamp.

"It's amazing to me that they could deliver mail for that cheap," he said.

The postage increase is the fourth since 1999, when the cost of a first-class stamp went from 32 cents to 33 cents. The most recent previous increase was a 3-cent rise in June 2002, to 37 cents.

Those increases were implemented to offset the financial woes of the Postal Service, which had been losing money for years. (For the most recent fiscal year, which ended Sept. 30, the Postal Service reported a net income of $1.4 billion.)

Legislative action in 2003 enabled the agency to avoid an increase for nearly four years. Congress allowed the agency to scale back on its pension payments because a government analysis showed that it would overpay its obligation by more than $70 billion. Under the legislation, postal officials used the savings to pay down the agency's debt, now at zero, and keep postage prices steady.

The legislation also required the Postal Service to put $3 billion into an escrow account each year, beginning in 2006. Congress has not decided how to use that money.

Across the Baltimore region, nonprofit organizations and businesses are bracing for the higher postage rates.

The Enoch Pratt Free Library uses private funds to mail 50,000 donor solicitations per year. That is in addition to the 20,000 newsletters sent out every two months, said Mona Rock, the library's spokeswoman.

The postage increase probably means that the library will have to reconfigure its private funds, such as using surplus money from other projects, to cover the difference, Rock said.

Robert McLean, executive director of the Mailers Council, which represents corporate and nonprofit mailers, predicted that consumers could see another rate increase as early as next year. The continuing escrow payments and other financial obligations, such as higher labor and health insurance costs, could put pressure on the Postal Service to request further rate increases, he said.

Postal officials have not requested another one, but Jim Quirk, a spokesman for the Postal Service, said the agency is studying the issue.

Millie Campion, who stopped at the downtown Baltimore post office last week, said she is taking the increase in stride. She wished only that the price of a stamp was a "nice round number."

"In comparison to other things like gasoline," she said, "that's nothing."

hanah.cho@baltsun.com

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