House passes bill to let struggling Postal Service use retirement fund to cover shortfall

House votes to prevent Postal Service shortfall

WASHINGTON — The House voted 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 388-32 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.

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.

The Postal Service and the letter carriers union support the bill. Postal Service spokesman Gerry McKiernan said that the post office is still likely to lose money this year but that the bill would help stabilize its short-term finances.

Fredric V. Rolando, president of the letter carriers union, called the bill “a good first step toward devising a more sensible and affordable schedule for prefunding our future retiree health benefits.”

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.