POSTAL SERVICE NEED NOT REDUCE SERVICES

Despite last January's penny increase in the cost of first-class postage, the Postal Service faces a whopping $2 billion to $3 billion in losses this fiscal year unless a fix is found -- and found promptly.

Postal officials say they have been battered by slowing business, a result of the economy and electronic alternatives like the Internet. During the holidays, first-class mail dropped for the first time in years, and priority mail is declining.

Soaring costs of fuel, competition and wage increases larger than the rate of inflation also are also taking their toll.

Postmaster General William Henderson last week announced the projected loss, which follows a $199 million loss last fiscal year after five years in the black. Henderson said the Postal Service needs a major overhaul to avoid threats to its universal mail service.

Henderson said the Postal Service plans labor, administrative and transportation cuts over the next five years, and the agency is committed to cutting costs by $2.5 billion by 2003.

The agency also is freezing more than 800 new construction and leasing projects nationwide.

And it is preparing to apply this summer for another rate increase that would take effect next year. But because it operates under the laws of Congress, it would take a year for the rate increase to gain approval. In the meantime, the agency's operating expenses will continue to climb.

The Postal Service will conduct a study to determine how best to get the agency back on track. Among options are the possibilities of closing some post offices and facilities and ending some Saturday mail delivery with the exception of overnight mail.

The Postal Service, unlike other government agencies, must operate under the guidelines of Congress without the benefit of taxpayer money, yet postal rates in the United States are among the lowest in the world. With that in mind, the agency should pursue all cost-cutting possibilities that won't reduce current levels of service and ask Congress for adequate rate increases before taking such drastic measures as closing post offices and eliminating Saturday deliveries.