[Weekly Compilation of Presidential Documents Volume 40, Number 49 (Monday, December 6, 2004)]
[Pages 2877-2878]
[Online from the Government Publishing Office, www.gpo.gov]

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

November 29, 2004

Dear Mr. Speaker:  (Dear Mr. President:)

    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 the 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


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 30.

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