09:15 AM PDT on Monday, September 26, 2011

BY BEN GOAD
WASHINGTON BUREAU
bgoad@pe.com

WASHINGTON – With the U.S. Postal Service hemorrhaging money and fast approaching insolvency, Inland lawmakers are backing competing plans to overhaul the beleaguered institution.

Scrapping Saturday mail delivery, hiking postage rates, shuttering thousands of post offices and laying off as many as 120,000 employees are all on the table as Congress prepares to grapple with the issue in the coming days.

At opposing ends of the debate are Rep. Darrell Issa , R-Vista, who introduced a bill to drastically overhaul the service, and Rep. Joe Baca, D-Rialto, co-sponsor of a measure allowing postal officials to stave off financial default through changes in the way it funds health benefits for retirees and reimbursement for past payments into the federal retirement system.

The Postal Service’s hard times are a consequence of the declining use of “snail mail” as people increasingly pay bills and conduct other business online.

The agency is funded through the sale of postage and other products, has seen a $1 billion drop in revenue and a 22 percent decrease in mail volume over the past four years, Postmaster General Patrick R. Donahoe told a Senate panel earlier this month.

“It’s daunting,” Postal Service spokesman Greg Frey said. “Our primary product for decades was First Class mail. That has been eroding very rapidly in the last 10 years. It’s a fundamental shift of demand.”

Revenues have long fallen short of the amount needed to support a Postal Service workforce that totals more than half a million. Donahoe projected that the service will have lost as much as $10 billion in the current fiscal year, which ends this week. After that, he said, the Postal Service would have enough money to operate for another week before it is unable to pay its bills.

He has targeted roughly 3,700 post offices — including locations in San Bernardino and Big Bear — and more than 250 mail processing facilities, including one in San Bernardino, for potential closure. At the same time, he called upon Congress to take actions he said would give the Postal Service a chance to remain solvent.

Among them is a change in the way the service funds retiree health benefits. Unlike other federal entities, the service must pre-pay $5.5 billion annually for future retirees, on top of almost $2 billion it pays current retirees, Frey said.

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