By Bernie Becker - 11/15/12 03:44 PM EST
The U.S. Postal Service announced Thursday that it lost a record $15.9 billion in the most recent fiscal year, and urged Congress to wrap up its work on a postal overhaul before the end of the year.
USPS’s fiscal 2012 losses were largely driven by two separate defaults, in which the agency failed to pay a combined $11.1 billion in required prepayments for retiree healthcare.
Postmaster General Patrick Donahoe said that his agency was doing what it could to stay afloat, given legal restrictions, but that the almost $16 billion in losses illustrated just how serious the need was for congressional action.
“It’s critical that Congress do its part and pass comprehensive legislation before they adjourn this year to move the Postal Service further down the path toward financial health,” Donahoe said in a statement.
“We continue to do our part to grow revenue and reduce expenses by making our operations more efficient and by providing our customers with new and expanded services to meet their mailing and shipping needs.”
The Senate passed a postal overhaul bill in April, but both the House and USPS said that measure by itself wouldn’t be enough to put the service on the path to long-term health.
House Oversight Committee Chairman Darrell Issa (R-Calif.), the sponsor of that measure, has said that he believes the House will take up the legislation, and that he hopes a final compromise between the Senate and the House can be enacted this year.
USPS lost $5.1 billion in fiscal 2011, but that figure did not include any losses from the healthcare prepayments, which were put into the place in a 2006 postal reform bill. The service’s scheduled payment for 2011 was pushed back into the 2012 fiscal year, which ended on Sept. 30.
Without the prepayment losses, which accounted for around 70 percent of USPS’s total red ink, the agency would have lost $4.8 billion in fiscal 2012.
The Coalition for a 21st Century Postal Service, a coalition of related businesses and industries, expressed alarm about the figures, and urged Congress to enact comprehensive postal reform during its lame-duck session this year.
“The Postal Service is facing a fiscal cliff of its own and any unanticipated drop in mail volumes could send the agency over the edge,” said Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service. “If Congress fails to act, there could be postal slowdowns or shutdowns that would have catastrophic consequences for the 8 million private sector workers whose jobs depend on the mail.”
USPS, which has taken on billions of dollars in losses in 2007, has said that it is trying to adapt as people rely more and more heavily on electronic communication. The agency also took a financial hit following the fiscal crisis.
In its most recent financial statement, the agency said that revenues from first-class mail, which peaked in 2007, fell 4 percent in 2012, though that decline wasn’t as stark as in previous years.
But at the same time, USPS also said that its revenue from shipping packages is continuing to grow, though not quickly enough to offset losses from first-class mail.
The agency said that its package business grew almost 9 percent in 2012, as consumers find more ways to shop online.
USPS is now entering the holiday mailing season, historically its most profitable time of the year. But the agency is also warning that it could run out of cash at least temporarily next October, after its annual workers compensation payments to the Labor Department are due.
—This post was updated at 11:11 a.m.