[Weekly Compilation of Presidential Documents Volume 32, Number 47 (Monday, November 25, 1996)]
[Pages 2426-2427]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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 in- 

[[Page 2427]]

crease 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 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.