[Weekly Compilation of Presidential Documents Volume 38, Number 49 (Monday, December 9, 2002)]
[Pages 2108-2109]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Letter to Congressional Leaders Transmitting an Alternative Plan for 
Locality Pay Increases for Civilian Federal Employees

November 27, 2002

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) pay system in January 2003.
    Under title 5, United States Code, civilian Federal employees 
covered by the GS pay system would receive a two-part pay increase in 
January 2003: (1) a 3.1 percent across-the-board increase in scheduled 
GS rates of basic pay linked to the part of the Employment Cost Index 
(ECI) that deals with changes in the wages and salaries of private 
industry workers, and (2) a locality pay increase based on Bureau of 
Labor Statistics' salary surveys. For Federal employees covered by the 
locality pay system, the overall average pay increase would be about 
18.6 percent.
    For each part of the two-part pay increase, title 5, United States 
Code, authorizes me to implement an alternative 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 limit the locality pay portion of the January 2003 GS pay 
increase.
    A national emergency has existed since September 11, 2001. Full 
statutory civilian pay increases in 2003 would interfere with our 
Nation's ability to pursue the war on terrorism. They would cost about 
$13.6 billion in 2003 alone--$11.2 billion more than the 2.6 percent 
overall Federal civilian pay increase I proposed in my 2003 Budget--and 
would build in later years. 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 total pay increase of 
3.1 percent would be appropriate for GS employees in January 2003.
    Because 5 U.S.C. 5303 already mandates an across-the-board GS pay 
increase of 3.1 percent in January 2003, GS locality-based comparability 
payments under 5 U.S.C. 5304 must remain at current levels. While my 
Administration remains committed to the principle of adjusting civilian 
Federal pay rates in keeping with changes in local labor market rates, 
our national situation precludes granting larger pay increases to GS 
employees at this time.
    Accordingly, I have determined that:
    (1) Under the authority of section 5303(a) of title 5, United States 
Code, the pay rates for each statutory pay system will be increased by 
3.1 percent, effective on the first day of the first applicable pay 
period beginning on or after January 1, 2003; and
    (2) Under the authority of section 5304a of title 5, United States 
Code, locality-based comparability payments in the percentages set forth 
in the attached table will remain in effect in 2003.

[[Page 2109]]

    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. Inflation, as measured by the 
Consumer Price Index, is at 2.1 percent, well below the 3.1 percent 
across-the-board pay increase already mandated by current law, and 
Federal quit rates are at an all-time low of 2.1 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

Note: Identical letters were sent to J. Dennis Hastert, Speaker of the 
House of Representatives, and Richard B. Cheney, President of the 
Senate. This letter was released by the Office of the Press Secretary on 
November 29. This item was not received in time for publication in the 
appropriate issue.