Postal Service to end Saturday mail service

Package delivery to continue

Author: By Jennifer Liberto
Published On: Feb 06 2013 06:34:49 AM CST   Updated On: Feb 06 2013 07:35:12 AM CST
WASHINGTON (CNNMoney) -

The U.S. Postal Service plans to stop delivering letters and other first-class mail on Saturdays beginning Aug. 1, although packages will continue to be delivered.

Tired of waiting for Congress to help, the Postal Service later Wednesday is expected to unveil a series of more drastic cuts they plan to pursue that will save them billions of dollars, a representative for the service confirmed.

It's unclear at the moment how the Postal Service has the authority to quit delivering letters on Saturdays. Previously, they've said they need Congress to change current law to do so.

However, two sources confirmed for CNN that the plan includes an end to Saturday mail service except for package delivery, which has seen growth in the past few years.

The Postal Service has been borrowing billions of dollars from taxpayers to make up for shortfalls caused by a 2006 congressional mandate, under which it has to pre-fund healthcare benefits for future retirees. Technological advances have also led to a decline in first-class mail, which most consumers use to stay in touch and pay bills.

The situation turned particularly dire last year -- the agency twice defaulted on payments totaling $11 billion, and it exhausted a $15 billion line of credit from the U.S. Treasury.

In the past year, the Postal Service has cut hours at thousands of post offices -- some are open for only two hours a day. It has also merged some of its plants, which led to a 28,000 drop in its workforce through retirements and departures by employees who couldn't relocate or take up other postal jobs.

Postal officials have been calling on Congress to pass legislation to ease their fiscal pain. And a top House Republican and Senate Democrat say they worked together during the fiscal cliff talks in December, though no resolution was reached on how to save the Postal Service.

The U.S. Postal Service is, by law, an "independent establishment" of the executive branch. The agency doesn't normally use tax dollars for operations, except for its $15 billion loan from Treasury. In 2005, the Postal Service had no debt, officials said.

If Congress doesn't act soon, the Postal Service could come dangerously close to running out of cash next month. A report last year projected that by mid-March, the agency would have about $1 billion in cash -- barely enough to keep the agency running for four days.

That prompted U.S. Postmaster General Patrick Donahoe to announce he was going to his board to accelerate cost-cutting measures. In the meantime, Rep. Darrell Issa, a California Republican, and Sen. Tom Carper, a Delaware Democrat. have been assuring the agency that they are working together to come up with a resolution.

But Issa and Carper lacked specificity in details of when, or how, they would achieve that goal. Congressional aides say they're hopeful it'll get passed soon.