At first glance, the Postal Service’s decision to drop Saturday delivery might seem completely unrelated to Henrico County’s push for a meals tax or municipal elections in San Diego. But the issues have similar roots.
Despite cutting its workforce 28 percent and slashing costs, The Postal Service is hemorrhaging red ink. But while shifting mailing patterns account for some of the problem, by far the biggest cause is retiree benefits. In 2006, Congress passed a law forcing the Postal Service to set aside billions of dollars every year to pay for future retiree medical costs. The mandate accounts for every cent of the Postal Service’s losses last year and 80 percent of its losses this year. The service has to find the money to meet the mandate – and Saturday delivery is the route it has chosen.
So what does this have to do with Henrico officials’ desire to impose a meals tax? Like the Postal Service, the county is facing an unfunded pension mandate. New accounting standards that will go into effect in 2014 mean localities will have to assume the entire burden of teacher pension liabilities. For Henrico, that puts another half-billion dollars on the debt side of the ledger. (Other localities face the same problem.) This means that, like the Postal Service, they have to do something to offset that big red smear – either by cutting services, or raising revenue.