Bush pay decision could prevent locality-based raises

President Bush on Friday decided to let a 3.6 percent across-the-board pay raise for 2002 stand, a decision that could leave no room for additional locality-based raises for employees in San Francisco, New York and other high-priced cities. Under the 1990 Federal Employees Pay Comparability Act, if the President wanted to give federal employees an across-the-board raise higher or lower than 3.6 percent, he had to act before the end of the day Friday. A formula in the 1990 law that is based on the Labor Department's Employment Cost Index established the 3.6 percent across-the-board raise. In his Feb. 2002 budget proposal, the President proposed a total raise of 3.6 percent for federal workers. Friday's decision to allocate the whole 3.6 percent to an across-the-board increase could be seen either as a decision to give federal employees the same raise no matter where in the country they work, or as an acquiescence to congressional efforts to give employees a 4.6 percent total raise next year. The House in July approved a total 4.6 percent raise for federal workers as part of the 2002 Treasury-Postal appropriations bill. If the Senate follows suit, then Bush would be forced to veto the entire Treasury-Postal bill if he wanted to deny employees a larger raise. The 1990 pay law provides for the highest locality-based raises for workers in cities such as San Francisco, New York and Los Angeles, where the cost of labor is relatively expensive, and the lowest raises for workers in cities such as Orlando, Fla., and Richmond, Va., where labor is cheaper. Last year, President Clinton gave federal employees a 2.7 percent across-the-board increase and then divided up another 1 percent raise among the 32 localities, for a total average raise of 3.7 percent. Federal raises last year ranged from 3.6 percent in Orlando to 3.8 percent in the Washington area to 4.5 percent in San Francisco. Federal employees still may see higher raises next year, however. If the 4.6 percent raise makes its way into law, then Bush could announce in November that the additional 1 percent would be allocated among workers based on where they work. Bush will have to act in November even if the appropriations bill doesn't pass; otherwise federal workers could get double-digit locality-based raises based on a formula in the 1990 pay law. The President, however, could veto the legislation or try to get the higher raise removed from the bill in back-room negotiations. The Bush administration estimates that a 4.6 percent total raise would cost $900 million more than a 3.6 percent total raise. For most of the past 20 years, federal employees and military personnel have received roughly the same annual pay hikes. If Bush has his way, that tradition would end. The President has proposed giving military personnel a 4.6 percent across-the-board increase coupled with targeted raises that would boost every service member's paycheck by between 5 percent and 10 percent. "We do not believe that military pay and civilian pay raises should necessarily be automatically linked," administration officials said in a statement in June. Federal union officials have been arguing all year that Bush should give federal workers a 4.6 percent raise to help close the gap between federal and private-sector salaries, which the Office of Personnel Management estimates is about 21 percent this year. The 1990 law was designed to close that gap over 10 years, which OPM estimated was about 30 percent a decade ago.