By Christopher Doering
WASHINGTON (Reuters) - The U.S. Postal Service on Friday proposed increasing the price of a first-class stamp by 2 cents next year as part of a sweeping rise in rates for most types of mail needed to fund a $3.1 billion escrow account requirement.
The Postal Service said the price of a first-class stamp would rise to 39 cents from 37 cents early next year if the increase is approved by the Postal Rate Commission, an independent body that oversees the post office.
The latest increase would be part of a broader 5.4 percent rate rise that the Postal Service would apply to most packages. Stamp prices have risen three times since 1999, most recently by 3 cents in June 2002.
Under the current proposal, Express Mail package overnight would increase to $14.40 from $13.65, and Priority Mail, a heavily promoted 2-3 day service, would rise to $4.05 from $3.85 for a 2-pound package.
Congress ordered the Postal Service in 2003 to establish the escrow after government auditors determined the agency was overpaying to its retirement fund. The excess payments were instead placed in the account, which the post office can not use to run its operations without additional congressional legislation.
"If we did not have this legal obligation the prices wouldn't be going up," said Jerry McKiernan, manager of media relations for the Postal Service.
The Postal Service vowed to eliminate the rate increase if Congress removed the escrow funding requirement.
"From everything that I hear, it makes me fairly confident that something will happen (in Congress) this year," said Brynn Barnett, a spokesman with with Rep. John McHugh, a New York Republican who has introduced legislation to overturn the escrow payment requirement.
The rate increases come as the Postal Service's lucrative first-class business, which generates more than half of the agency's revenue, has declined amid increased competition from e-mail and commercial delivery services such as FedEx Corp. and United Parcel Service Inc. .
The 230-year old Postal Service delivers mail to 142 million homes and offices each weekday.
