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USPS facing challenges due to cost of added retirement benefits

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The U.S. Postal Service prides itself on certainty: Neither snow, rain, heat nor gloom of night slows down the people who deliver mail in Northern New York and across the country.

But these days, uncertainty reigns, and it has nothing to do with the weather. What about cutting mail on Saturdays? And fewer post offices dotting the north country’s rural landscape? In the face of a $20 billion hole in the budget, what does the future hold for the Postal Service?

“I would agree that it is in crisis,” said Rep. William L. Owens, D-Plattsburgh. “The question of how it got there is a bit more complex.”

A May 15 deadline looms before the Postal Service starts closing 3,700 branches, including several in the north country. Even as the region’s congressional candidates debate the merits of differing plans to shore up the Postal Service, they also are looking to fill big shoes. Former Rep. John M. McHugh, R-Pierrepont Manor, was his chamber’s point man on the issue, and authored a 2006 bill that changed the Postal Service. Some of those changes, the congressional candidates argue, might need some tweaks themselves.

Of course, the first factor that observers point to is the Internet. Email can get a message to its recipient immediately, which “snail mail” never could. And another big convenience factor for the public: many customers now receive and pay bills online, further reducing postal use.

But, Mr. Owens said, the $20 billion deficit over the past few years has much to do with the fact that the McHugh postal legislation required the Postal Service to pay down 75 years of retirement benefits for employees.

Mr. Owens said that the $5.5 billion annual payment should be done away with, and that $11 billion in overpayments that have been made since the legislation went into effect should go back into the post office’s pocket.

“I think the basic intent of the legislation was fine, but the computations that were used to calculate the payment clearly were wrong,” Mr. Owens said.

But that sort of one-time fix won’t cure the Postal Service’s ills, officials agree.

The Postal Service is clamoring for even more changes to post office structure, which risks becoming parochially toxic when offices in legislators’ home districts are targeted.

For example, 3,700 post offices and mail processing centers nationwide are slated for closure, including several in rural north country communities. The Postal Service already has the ability to close them, but agreed to hold off until Congress could try to work out legislation to fix its problems.

Mr. Owens said Congress should pass a law instituting a two-year ban on closing post offices. If Congress can’t reach an agreement, the Postal Service will start shuttering post offices on May 15, officials there have said.

North country post offices on the list of potential closures include Brier Hill, Cranberry Lake, Dickinson Center, Ellisburg, Fine, Fishers Landing, Hailesboro, Lorraine, Martinsburg, Newton Falls, Parishville, Piercefield, Pyrites, Rainbow Lake, Wanakena, West Leyden and West Stockholm. Plessis and Deferiet already have closed.

Mr. Owens said the post office closures would affect less than 1 percent of the Postal Service’s budget.

“It would have no material impact on its deficit,” he said. “Imposing that kind of injury on small communities is not cost-effective.”

Mr. Owens said he’d want to see how the Postal Service would fare if it got back the $11 billion and didn’t have to pay in $5.5 billion annually, so he’s not prepared to answer the more granular questions — for example, whether he’d support a proposal to institute apartment-style mailboxes at the end of housing developments, or whether Saturday delivery should be ended.

Politically, Mr. Owens has plenty at stake in this fight. The Postal Service has targeted a mail processing center in Plattsburgh for closure. And unions representing Postal Service workers have donated generously to his re-election campaign.

Getting rid of overnight mail — which would involve closing mail processing centers such as the one in Plattsburgh — would have a “tremendous” impact, Mr. Owens said.

He said the Postal Service should consider delivering beer and wine for retailers, which it’s currently not allowed to do, but which could provide a new revenue stream.

Mr. Owens said he was much more supportive of a Senate bill that passed in April than the bill being debated in the House of Representatives, which was introduced by Rep. Darrell Issa, R-Calif.

The Senate bill included a moratorium on post office closures and a measure to get the $11 billion in retirement overpayments back. The House bill also addresses the $11 billion in retirement overpayments, but unlike the Senate bill, does not use the money to offer buyouts for Postal Service employees.

The “entire emphasis” of Mr. Issa’s bill, Mr. Owens said, was on cuts.

The Issa bill would set up a Base Realignment and Closure-like commission to decide which post offices to close. The Senate bill, on the other hand, would prevent post offices from being closed for two years.

Matthew A. Doheny, who will face Mr. Owens on the Conservative and Independence lines in the Nov. 6 election and is vying for the Republican nomination in a June 26 primary, said the House of Representatives shouldn’t act as 435 postmasters general.

So for specific questions like cutting Saturday mail delivery or the process of closing post offices, he’s noncommittal (though he did say he’s not supportive of closing post offices). Leave those decisions up to Postal Service officials who actually know what’s going on in the business, he said.

“We need people on the ground making those decisions who don’t have political considerations or considerations besides making the post office a viable entity,” said Mr. Doheny, who lives in Watertown.

He said he’s seen plenty of companies that have gotten themselves into financial trouble in much the same way that the Postal Service did. As a financial portfolio manager for Deutsche Bank Securities, he helped restructure companies that were struggling because they got away from their core mission.

In the case of the Postal Service, Mr. Doheny said, the core mission is delivering basic packages and letters. It ought to focus on that, he said.

But at the same time, Mr. Doheny said, the Postal Service should consider thinking outside of the cardboard box. He said it should sell advertisements to companies looking to plaster their names in one of the nation’s most ubiquitous sights: Postal Service uniforms and mail trucks.

The Postal Service also should look at subcontracting its retail locations to existing businesses, which would pay a fee to run the operation.

“The concept of the post office might not look like the government bureaucracy-type building,” Mr. Doheny said.

Of the three candidates vying for the congressional seat, Kellie A. Greene, who will face Mr. Doheny in the June 26 primary, was the most willing to take more politically risky positions.

For example, Ms. Greene said, she’d have no problem cutting Saturday mail delivery service. And on closing post offices, Ms. Greene, who has a background in logistics, said: “They are operating with way too many post offices, way too many distribution facilities.”

Regarding post office closures, she said, “It’s not that big of an inconvenience. Is it going to affect people? Sure. The average person, it will be momentary; they’re ticked off about it, (then) they’ll get over it.”

She added that she was “sensitive” to the issue of post office closures.

The House proposal would allow the Postal Service to break contracts with the unions that represent its employees, potentially slashing more than 100,000 jobs.

While all the candidates agreed that setting a contract-breaking precedent is a bad idea, Ms. Greene was the only one to suggest that federal government workers shouldn’t be allowed to unionize at all. Unionized workers come at a bigger cost to the taxpayer and limit employer flexibility, she said.

“I really don’t think they should be allowed to unionize when we the taxpayers are footing the bill,” she said.

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