House votes to prevent Postal Service shortfall

Measure would cut annual payment to health care fund

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updated 6:21 p.m. ET Sept. 15, 2009

WASHINGTON - The House passed a bill Tuesday to let the struggling U.S. Postal Service cover a budget shortfall by reducing its annual payment to a health care fund for retirees by $4 billion.

Under current law the Postal Service is required to transfer $5.4 billion to the Retiree Health Benefits Fund by Sept. 30, the end of the budget year. Postal officials have said they don't have enough money to make the payment.

The House voted 388 to 32 to reduce the transfer to $1.4 billion, which would keep the Postal Service from defaulting on the payment. Officials said the money is available because the fund is on track to have a surplus.

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The bill "is intended to provide the Postal Service with some relief," said Rep. Edolphus Towns, D-N.Y., chairman of the House committee that oversees the Postal Service.

The bill now goes to the Senate, which is considering similar legislation.

The Postal Service is struggling from a sharp decline in mail volume caused by the recession and the movement from traditional mail to the Internet.

Postal officials are considering closing 413 post offices to save money. The post office has also suggested reducing mail delivery from six to five days a week. Salaries of Postal Service officers and executives are frozen.

Lawmakers acknowledged that more legislation could be needed to shore up the Postal Service's finances.

"We still have some more work to do," Towns said on the floor of the House. "The problem has not been solved."

Congress established the health care fund in 2006. The Postal Service is required to add to it each year and start using the money in 2017 to pay for retirees' health benefits. The benefits are currently covered by the Postal Service's general budget.

The fund currently has about $32 billion, putting it on track to have a surplus by 2017, according to a recent report by the Postal Service's inspector general.