U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

39–011 2004

108th Congress, 2d Session – – – – – – – – – – – – House Document 108–237 

AN ALTERNATIVE PLAN FOR 

LOCALITY PAY INCREASES 

COMMUNICATION 

FROM

THE PRESIDENT OF THE UNITED STATES 

TRANSMITTING

AN ALTERNATIVE PLAN FOR LOCALITY PAY INCREASE PAYABLE 

TO CIVILIAN FEDERAL EMPLOYEES COVERED BY THE GENERAL 

SCHEDULE (GS) AND CERTAIN OTHER PAY SYSTEMS IN JANUARY 2005, PURSUANT TO 5 U.S.C. 5305(a)(3) 

DECEMBER 6, 2004.—Referred to the Committee on Government Reform 

and ordered to be printed 


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(1) 

THE WHITE HOUSE, 

Washington, November 29, 2004. 

Hon. J. DENNIS HASTERT, 

Speaker of the House of Representatives, 

Washington, DC. 

DEAR MR. SPEAKER: I am transmitting an alternative plan for 

the locality pay increase payable to civilian Federal employees covered by the General Schedule (GS) and certain other pay systems 

in January 2005. 

Under title 5, United States Code, civilian Federal employees 

covered by the GS and certain other pay systems would receive a 

two-part pay increase in January 2005: (1) a 2.5 percent across-theboard increase in scheduled rates of basic pay derived from Employment Cost Index data on changes in the wages and salaries of 

private industry workers, and (2) a locality pay increase based on 

Bureau of Labor Statistics’ salary surveys of non-Federal employers 

in each locality pay area, which would average about 10.6 percent 

for eligible employees. Including increases for blue-collar and other 

workers, the total Federal employee pay increase would cost about 

11.2 percent of payroll in calendar year 2005. For Federal employees covered by the GS locality pay system, the overall average pay 

increase would be about 13.1 percent, far higher than 1.5 percent 

total pay increase I proposed in my Fiscal Year 2005 budget. 

For the reasons described below, I have determined that it is appropriate to exercise my statutory alternative plan authority to 

limit the January 2005 GS locality pay increase. 

A national emergency has existed since September 11, 2001, 

which now includes Operation Enduring Freedom (in Afghanistan) 

and Operation Iraqi Freedom. Full statutory civilian locality pay 

increases averaging 10.6 percent in 2005 would divert resources 

from and interfere with our Nation’s ability to fight the war on terror, with respect to which a national emergency is in effect under 

the law. Such increases would cost about $9.8 billion in fiscal year 

2005 alone and would build in later years. 

Accordingly, I have determined that under the authority of section 5304a of title 5, United States Code, the locality pay percentages authorized in 2004 shall remain in effect in 2005. 

Finally, the law requires that I include in this report an assessment of the impact of my decision on the Government’s ability to 

recruit and retain well-qualified employees. This decision will not 

materially affect our ability to continue to attract and retain a 

quality Federal workforce. To the contrary, since the Congress has 

not funded the cost of a pay raise in excess of the 1.5 percent increase I proposed, agencies would have to absorb the additional 

cost and could have to freeze hiring in order to pay the higher 

rates. Moreover, GS quit rates are at an all-time low of 1.6 percent 

per year, well below the overall average quit rate in private enterVerDate Aug 04 2004 06:43 Dec 07, 2004 Jkt 039011 PO 00000 Frm 00003 Fmt 6633 Sfmt 6633 E:\PICKUP\HD237.108 HD237
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prise. Should the need arise, the Government has many compensation tools, such as recruitment bonuses, retention allowances and 

special salary rates, to maintain the high quality workforce that 

serves our Nation so very well. 

Sincerely, 

GEORGE W. BUSH. 

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