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Congress investigates passport fees By LARRY MARGASAK, Associated
Press Writer

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.

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.