Bush seeks 3 percent federal pay raise for 2008

President Bush proposed a 3 percent pay raise for civilian federal employees and military personnel in his fiscal 2008 budget, released Monday morning.

The proposal in the budget heeds recent calls by some House lawmakers for pay parity between members of the military and civilians and for a larger raise for 2008. In a January letter to President Bush, lawmakers argued that pay parity was essential to recruiting and retaining quality employees in the face of a retirement wave.

"As we fight the war on terrorism at home and abroad, both the armed services and the federal civilian workforce are integral to fulfilling the role of government for the American people," members wrote. "An equal pay adjustment in 2008 will send the important message that the services civilians and military personnel provide to America every day are highly valued."

For the first time, Bush's budget also includes a proposal to provide federal employees in Alaska, Hawaii and other noncontiguous parts of the country -- such as Guam -- with locality pay. Right now, these employees receive a cost-of-living increase each year on top of their across-the-board raises. COLAs do not count toward retirement benefits, but they are not taxed and can be larger than locality payments.

Hawaii Senator and chairman of the federal workforce subcommittee of the Homeland Security and Governmental Affairs Committee, Daniel Akaka, said he wants Office of Personnel Management staff to brief him on the new proposal.

"My goal is to ensure that federal workers in Hawaii and the other non-contiguous regions are not disadvantaged when it comes to their retirement," Akaka said.

The proposed 3 percent across-the-board raise is higher than the 2.2 percent pay hike approved for civilian federal employees and military personnel for 2007, and marks the second consecutive year the president's budget has called for equal adjustments to civil service and military pay.

The National Treasury Employees Union criticized the White House proposal, arguing that it reflects the administration's disregard for federal employees and their contributions, especially following the 2007 pay raise.

"Today's proposal comes on the heels of the lowest pay increase in 20 years and simply does not reflect the contributions of civilian federal employees and members of the military," NTEU President Colleen Kelley said.

Kelley said the failure of the administration to adequately address the disparity between public and private sector pay will "put the federal government at a further disadvantage with the private sector in hiring."

Rep. Steny Hoyer, D-Md., one of the signatories of the letter, said congressional leaders would have to consider the proposal "in the context of the long-term impact of recent adjustment levels on an already significant pay gap between federal employees and their private sector counterparts."

Hoyer said he intends to look at the request in terms of "what is responsible for keeping our government operating as the best in the world" and what is fair in terms of compensating federal employees and military personnel for the services they provide.

Meanwhile, Rep. Tom Davis, R-Va., another signatory of the letter, praised the president's move Monday, stating that it illustrates the progress of a 2004 law that mandates military pay raises equal to the change in the Labor Department's annual Employment Cost Index for the private sector's wages.

"I'm pleased to know we won't have to spend the next six months fighting for pay parity on behalf of federal employees," Davis said. "Instead, we can continue to focus on making the federal government a top-notch employer that can compete for talent with the private sector. Understanding the importance of federal employees and rewarding them accordingly is central to this effort."

Karen Rutzick contributed to this report.