MEASURE HOLDS LINE ON POSTAL RATES.(BUSINESS)

Byline: Jim Abrams Associated Press

WASHINGTON -- Americans will get a three-year reprieve from higher postal rates under legislation that allows the Postal Service to save billions of dollars that would have otherwise gone into pension payments.

The bill, which would require the Postal Service to keep stamp prices at current levels until 2006, passed 424-0 by the House on Tuesday and now goes to President Bush for his expected signature. The Senate passed the bill last week.

The legislation has strong support in the $900 billion mailing industry, which has suffered in recent years from the poor economy, lost volume, the anthrax scare, increased competition from online banking and other electronic communication, and public aversion to rising prices.

The price of a first-class stamp was raised to 37 cents last June, the fifth increase since 1991, when the rate jumped from 25 cents to 29 cents.

Mail advertising and parcel deliveries amounts to hundreds of billions of dollars in commerce every year, said Rep. John McHugh, R-N.Y., the bill's chief sponsor. The legislation "certainly would go a long way toward boosting the economic activities of this nation as a whole."

"This represents stable postal rates which we haven't seen for some time," said Neal Denton of the Alliance of Nonprofit Mailers, which represents churches, charities and other groups that use the mail to raise funds and disseminate information. "This is tremendous news."

The measure grew out of findings last year by the Office of Personnel Management that the Postal Service was paying billions of dollars too much into the Civil Service Retirement System, which covers workers who joined before 1984. The office estimated that the Postal Service would eventually overfund the retirement program by more than $70 billion.

The legislation allows the Postal Service to adjust its pension payments, with the condition that there be no rate increases until 2006 and that the savings be used to pay down the Postal Service's debts, which now stand at more than $11 billion. The savings can't be used to pay executive bonuses.

It is expected to result in savings of $2.9 billion this budget year and $2.6 billion next year.

The financial break comes as a presidential commission considers long-range changes to the money-losing agency. "It helps to lay the foundation for systematic reforms that are so desperately needed in the nation's mailing system," said William L. Davis, head of R.R. Donnelley, which provides printing and related services to catalog merchandisers and newspaper, magazine, book and directory publishers.

The bill is S. 380.

* On the Internet: Congress: thomas.loc.gov/USPS: www.usps.gov

Alliance of Nonprofit Mailers: www.nonprofitmailers.org/about.html