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Postal Service drops plan to cut rural offices

Agency will keep locations open with fewer hours

Toby Talbot/Associated Press

Becky Sweeney picked up a package at the post office in Websterville, Vt., on Wednesday. The office was on the list of thousands of rural offices to be closed by the Postal Service, but the agency, bowing to public pressure, has backed off the plan.

WASHINGTON - The US Postal Service said Wednesday it wants to keep hundreds of small post offices open with reduced hours, whittling down its ambitious plan to streamline its services and balance its books.

Giving Congress more time to consider alternatives, the service held back from the wholesale closing of thousands of mostly rural post offices or slowing down mail delivery, as it had proposed earlier.

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Postmaster General Patrick R. Donahoe said the latest plan would take two years to put into effect and would save $500 million a year. That would not be nearly enough to fill its shortfalls.

“The plan today will ensure rural communities will be served by the Postal Service,’’ Donahoe said. “It balances reducing cost with the need to serve rural America.’’

Last year, the Postal Service warned Congress that unless legislation was passed to overhaul its finances, it would have to start deep cuts in service this month or face a possible default.

On Thursday, the Postal Service is to disclose its financial results for the first three months of 2012. They are sure to be dismal.

Daily losses of $36 million have been piling up, and as matters stand, the Postal Service is headed for projected losses of about $18 billion a year by 2015, compared with about $14 billion this year.

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The agency has been proposing to close thousands of post offices and hundreds of regional mail-sorting centers, to eliminate Saturday home delivery, and to slow down the mail, revamp the benefits of postal workers, explore new lines of business, and make other changes. But much of that is in abeyance while Congress considers the alternatives.

Aside from reducing hours, among the options that the Postal Service said it would explore with individual communities are mergers of two existing offices that are close to each other, setting up village post offices in local establishments, such as gas stations or general stores, or contracting for delivery directly to homes and businesses.

The Senate recently passed legislation that instead would give the agency back $11 billion it overpaid into one of its pension funds, allow the agency to enter new lines of business like delivering beer and wine, while prohibiting the service from unilaterally closing post offices and laying off workers.

The House has not yet acted on an alternative bill.

Senator Thomas R. Carper, a Delaware Democrat, said he was glad the new proposal gave small towns more of a say, but that it was not far-reaching enough to solve the agency’s problems.

“Stopgap, piecemeal measures like the proposal offered today only address a small part of the problem and will not keep the Postal Service from an imminent collapse,’’ he said.

Representative Darrell Issa, a California Republican who chairs the House Oversight and Government Reform Committee, issued a statement saying a House proposal would seek to save money mostly by consolidating post offices in more populated areas rather than the tiniest rural offices.

“The smallest 10,000 post offices collectively cost USPS less than $600 million to operate each year,’’ he said. “That is less than one-eighth of the $5 billion USPS spends each year to operate its network of 32,000 post offices. To achieve real savings creating long-term solvency, the Postal Service needs to focus on consolidation in more populated areas where the greatest opportunities for cost reduction exist.’’

Legislation pending in the House would create a commission that would recommend post office closings and processing center consolidations. The House bill would also allow the Postal Service to end Saturday mail delivery. If the agency fails to achieve significant cost-savings within two years, the House bill would create a national commission and independent control board that would then step in to implement more drastic cuts, overriding union contracts and ordering layoffs if necessary.

The Postal Service is opposed to the independent control board; postal unions are also strongly opposed. At a meeting Friday, the Postal Service’s board of governors said that a bill passed by the Senate last week did not go far enough to give the agency the latitude it needs to close offices and cut its workforce.

“The bottom line is that the Senate bill does not provide the Postal Service with the flexibility and speed that it needs to have a sustainable business model,’’ Thurgood Marshall Jr., chairman of the postal board of governors, said at the meeting. “Our financial condition has been deteriorating for several years, and we have been operating with a very low cash balance.’’

Senators asked Donahoe last week to extend the moratorium on closing post offices, which expires next week, until Congress enacts a new law.

“We are deeply concerned that the closing of these postal facilities prior to postal reform legislation being enacted would be devastating to communities around the country,’’ said Senator James Webb, Democrat of Virginia.

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