Dateline: 11/30/02

Citing the overriding importance of the war on terrorism, President Bush has cancelled locality-based pay raises scheduled for almost all civilian federal employees in January 2003.

In a letter sent Nov. 27, President Bush informed Congress he was freezing the federal pay raise to an across-the-board 3.1 percent, while canceling the "locality" increase component of federal pay raises. 

"For each part of the two-part pay increase," wrote Bush, "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.'"

If allowed to stand, the locality adjustment, on top of the 3.1 percent increase, would have resulted in combined average raises as high as 18.6 percent, an increase Bush found unacceptable in the face of costs being incurred to conduct the war on terrorism.

White House budget analysts had projected that full raises would have cost some $13.6 billion in 2003, a figure over $11 billion more than Bush had proposed in his 2003 federal budget.

"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." wrote President Bush.

This will be the first time federal employees have been denied the annual locality adjustment pay increase since the law creating it went into effect in 1990.

Military raises not affected
President Bush's action does not affect the minimum 4.1 percent pay increase promised to members of the U.S. military in 2003. However, military pay raised could be higher, pending final approval of the FY 2003 Defense Authorization Act. For more details on the 2003 military pay raise, see "What's the Deal With Your Military Pay Raise" by About Guide to the US Military Rod Powers.