    [Public Papers of the Presidents of the United States: George W. Bush (2006, Book II)]
    [November 30, 2006]
    [Pages 2142-2144]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders Transmitting an Alternative Plan for
    Locality Pay Increases Payable to Civilian Federal Employees
    November 30, 2006

    Dear Mr. Speaker:  (Dear Mr. President:)
        I am transmitting an alternative plan for locality pay increases
    payable to civilian Federal employees covered by the General Schedule
    (GS) and certain other pay systems in January 2007.
        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 2007: (1) a 1.7 percent across-the-board
    adjustment in scheduled rates of basic pay derived from Employment Cost
    Index data on changes in the wages and salaries of

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    private industry workers, and (2) a 6.9 percent locality pay adjustment
    based on Bureau of Labor Statistics' salary surveys of non-Federal
    employers in each locality pay area. According to the statutory formula,
    for Federal employees covered by the locality pay system, the overall
    average pay increase would be about 8.6 percent. The total Federal
    employee pay increase would cost about $8.8 billion in fiscal year 2007
    alone.
        Title 5, United States Code, authorizes me to implement an
    alternative locality pay plan if I view the adjustment that would
    otherwise take effect as inappropriate due to ``national emergency or
    serious economic conditions affecting the general welfare.'' For the
    reasons described below, I have determined that it would be appropriate
    to exercise my statutory alternative plan authority to set an
    alternative January 2007 locality pay increase.
        A national emergency, within the meaning of chapter 53 of title 5,
    has existed since September 11, 2001, that includes Operation Enduring
    Freedom in Afghanistan and Operation Iraqi Freedom. The growth in
    Federal requirements is straining the Federal budget. Full statutory
    civilian pay increases costing $8.8 billion in 2007 alone would
    interfere with our Nation's ability to pursue the war on terrorism.
        Such cost increases would threaten our efforts against terrorism or
    force deep cuts in discretionary spending or Federal employment to stay
    within budget. Neither outcome is acceptable. Therefore, I have
    determined that a locality pay increase of 0.5 percent would be
    appropriate for GS and certain other employees in January 2007. Our
    national situation precludes granting larger locality pay increases at
    this time.
        Accordingly, I have determined that under the authority of section
    5304a of title 5, United States Code, locality-based comparability
    payments for the locality pay areas in amounts set forth in the attached
    table shall become effective on the first day of the first applicable
    pay period beginning on or after January 1, 2007. When compared with the
    payments currently in effect, these comparability payments will increase
    the General Schedule payroll by 0.5 percent.
        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. I do not believe this
    decision will materially affect our ability to continue to attract and
    retain a quality Federal workforce. To the contrary, since any pay raise
    above what I have proposed would likely be unfunded, 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 continue to be very
    low (2.0 percent on an annual basis), 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

    Note: Identical letters were sent to J. Dennis Hastert, Speaker of the
    House of Representatives, and Richard B. Cheney, President of the
    Senate.

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