WASHINGTON — First, Americans endured exasperating delays and ruined vacations from passport processing backlogs. Now, a congressional investigation indicates they may have been overcharged, too — perhaps by more than $100 million a year.
Sens. Byron Dorgan, D-N.D., and Charles Schumer, D-N.Y., said the State Department and Postal Service quietly gouged U.S. citizens over the government's $97 passport fees, even as new anti-terrorism laws require more travelers to carry passports. They are asking the Bush administration for an accounting of where the passport profits go.
Over the past year, as the government issued nearly 14 million new passports, it collected at least $111.4 million more in passport fees than its stated costs, according to calculations by The Associated Press based on figures from State Department and congressional investigators.
The government's standard $97 fee is just a start for some people. The State Department offers to send travelers a passport in a hurry for an extra $60 plus overnight delivery costs. Some private companies offer speedy service for $180 or more. Passport photos typically cost $15.
Since 2005, a new passport has cost $97 for adults, $82 for children under 16. At the senators' request, congressional investigators studied whether a $30 portion of that charge was justified.
The $30 is intended to cover the cost of clerks examining and accepting passport applications at post offices, State Department passport offices, courthouses, libraries, municipal offices and universities.
The investigators' findings? The government's $30 fee was roughly double the actual cost when imposed in 2002. The Postal Service, which operates 5,382 locations where people can apply for passports, estimated its costs at $13.31 in 2002. The State Department, which operates 14 passport offices, said its costs were $16.20 at that time.
"This is not supposed to be a profit-making venture," Dorgan said. "They charge 30 bucks just for passing something across the counter."
Robert Tollin of New York City, who received his passport in June just in time for his honeymoon in Mexico, was angry when informed how much the fee exceeded the costs.
"That's over a 200 percent markup," Tollin said. "Maybe I should be in the Post Office business. That's an exorbitant markup. I don't mind paying a service fee, but that's outrageous."
The remaining $67 is spent producing the passport booklet and for related costs, such as rent at passport offices, security guards and background checks. Investigators from the Government Accountability Office did not look into that portion of the fee.
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A Postal Service spokeswoman, Joanne Veto, said the agency's $13.31 figure was not an accurate reflection of its costs when the fee was imposed. Congressional investigators, however, said that was the figure the Postal Service gave the State Department for use in setting the $30 fee.
The State Department said in a statement, "We aren't able to comment on GAO reports before they are officially released."
The department told the GAO it has hired a contractor to perform a new cost study of the fee before December 2008.
"It's sort of a tax," Schumer said. "Where did all the money go? What are they going to do to correct it?" Schumer and Dorgan have asked Secretary of State Condoleezza Rice to determine whether fees should be lowered.
The reputation of the government's passport agency was severely tarnished during the summer, when a processing backlog by July left more than 2 million people waiting for passports. Officials said 500,000 were left waiting more than three months, trying to obtain what typically is ready in six weeks.
Vacations, weddings, honeymoons, business meetings, education plans and nonrefundable deposits all fell victim to the delays. People lost work time waiting in long lines.
"We've had a passport mess in this country," Dorgan said. "Now we find out the same State Department ... has been double-charging with respect to the fee for applying for the passport. This is not acceptable."
Linda Kocher of Wahpeton, N.D., paid twice for three passports this year — the second payment was necessary when the original passports failed to arrive as she was ready to vacation in Mexico.
"You think they're not trying to make any money off me. That's baloney," she said.
The GAO said the State Department and the Postal Service — which are permitted to keep any profits — benefited from a dramatic surge in the numbers of passports issued, rising from 7 million in 2002, including renewals, to more than 18 million over the past year.
The senators estimated the government overcharged travelers $112.7 million during 2002, when just 7 million passports were issued.
The government uses some of its profits to provide free passports to relatives of dead soldiers traveling overseas to attend funeral services. But the senators said it was "inconceivable" all the government's profits were used for those purposes, and they asked Rice for a detailed accounting of where the money went.
More Americans are required to have passports because of new anti-terrorism laws. The State Department has said it expects to issue as many as 23 million passports next year and 30 million more in 2010.
Since January, for the first time, travelers visiting Canada, Mexico, Central and South America, the Caribbean and Bermuda by air have needed passports — or proof they applied for passports. The requirement will take effect for land and sea travelers before June 2009.
Since many Americans travel often to these areas, including regular cross-border travel to Canada and Mexico, the State Department plans to introduce a new $45 Western Hemisphere passport card next spring.
The fee for accepting the applications would drop from $30 to $25 for the card and traditional passport books, under a State Department proposal.
The State Department told congressional investigators its cost for accepting applications at its offices in 2005 had risen to $24.36, virtually the same as the proposed new $25 fee. But consular officials could not describe how they calculated that estimate, investigators said.
The Postal Service initially told the GAO, in April 2006, its cost for accepting applications had jumped to $19. But later the mail service revised its cost estimate upward to $32.86 — adding overhead costs not associated with passport processing — making its cost appear to be higher than the $25 fee it would collect.
"It is unclear whether USPS's estimate accurately reflects its costs," the GAO said.
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