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[House Document 108-237]
[From the U.S. Government Publishing Office]

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
                                           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-the-board 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 
enterprise. 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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