[Weekly Compilation of Presidential Documents Volume 42, Number 48 (Monday, December 4, 2006)]
[Pages 2113-2114]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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 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.

[[Page 2114]]

    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.