    [Public Papers of the Presidents of the United States: William J. Clinton (1996, Book II)]
    [November 22, 1996]
    [Pages 2144-2145]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders on Locality-Based Comparability Payments
    November 22, 1996

    Dear Mr. Speaker:  (Dear Mr. President:)
        I am transmitting an alternative plan for Federal employee locality-
    based comparability payments (``locality pay'') for 1997.
        Under title 5, United States Code, Federal civilian employees would
    receive a two-part pay raise in January 1997: (1) a 2.3 percent base
    salary raise linked to the change in the wage and salary, private
    industry worker, part of the Employment Cost Index (ECI); and (2) a
    locality pay raise, based on the Bureau of Labor Statistics' salary
    surveys of non-Federal employers in local pay areas, costing about 5.2
    percent of payroll.
        But, for each part of the two-part pay increase, title 5 gives me
    the authority to implement an alternative pay adjustment plan if I view
    the pay adjustment that would otherwise take effect as inappropriate due
    to ``national emergency or serious economic conditions affecting the
    general welfare.'' Over the past 20 years, Presidents have used this or
    similar authority for most annual Federal pay raises.
        In evaluating ``an economic condition affecting the general
    welfare,'' the law directs me to consider such economic measures as the
    Index of Leading Economic Indicators, the Gross National Product, the
    unemployment rate, the budget deficit, the Consumer Price Index, the
    Producer Price Index, the Employment Cost Index, and the Implicit Price
    Deflator for Personal Consumption Expenditures.
        Earlier this year, I decided that I would implement--effective in
    January 1997--the full 2.3 percent base salary adjustment. As a result,
    it was not necessary to transmit an alternative pay plan by the legal
    deadline of August 31.
        In assessing the appropriate locality pay increase for 1997, I
    reviewed the indicators cited above and other pertinent measures of our
    economy. Permitting the full locality pay increases to take effect
    would, when combined with the 2.3 percent base salary increase, produce
    a total Federal civilian payroll increase of about 7.5 percent. This
    increase would cost about $5.9 billion in 1997, $3.6 billion more than
    the total 3.0 percent increase I proposed in the fiscal 1997 Budget.
    Such an increase is inconsistent with the budget discipline that my
    Administration has put in place and that has contributed to sustained
    economic growth, low inflation and unemployment, and a continuous
    decline in the budget deficit.
        To maintain this discipline and its favorable impact on economic
    conditions, I have determined that the total civilian raise of 3.0
    percent that I proposed in my 1997 Budget remains appropriate. This
    raise matches the 3.0 percent basic pay increase that I proposed for
    military members in my 1997 Budget, and that was enacted in the FY 1997
    Defense Authorization Act. Given the 2.3 percent base salary increase,
    the total increase of 3.0 percent allows an amount equal to 0.7 percent
    of payroll for locality pay.
        Accordingly, I have determined that:
          Under the authority of section 5304a of title 5, United States
            Code, locality-based comparability payments in the amounts set
            forth on the attached table shall be effective on the first day
            of the first applicable pay period beginning on or after January
            1, 1997. When compared with the payments currently in effect,
            these comparability payments will increase the General Schedule
            payroll by about 0.7 percent.
        Finally, the law requires that I include in this report an
    assessment of how my decisions will affect the Government's ability to
    recruit and retain well-qualified employees. While I regret that our
    fiscal situation does not permit granting Federal employees a higher
    locality pay increase, I do not believe this will have any

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    material impact on the quality of our workforce. Under the Federal
    Workforce Restructuring Act of 1994, and our efforts to reinvent Federal
    programs, the number of Federal employees is falling substantially. As a
    result, hiring and attrition are very low. In addition, as the need
    arises, the Government can use many pay 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,

                                                          William J. Clinton

    Note: Identical letters were sent to Newt Gingrich, Speaker of the House
    of Representatives, and Albert Gore, Jr., President of the Senate.