No Pay Freeze in Deficit Reduction Package Passed in Senate

The Senate has passed a deficit reduction package that does not include a pay freeze for federal employees for 2006.

Federal employees who are watching the saga of the 2006 pay raise will take heart in a new development.

The Senate passed a deficit reduction bill last week.

Here is the good news: There is no mention of a freeze on the 2006 pay raise for federal employees.

As some readers will recall, we recently published an article that detailed the intent of a group of Senators who have been referring to themselves as the “Fiscal Watch Team.” (See Just When You Thought It Was Safe!) One of the ways the group proposed to cut the federal budget deficit was to freeze the salaries of federal lawmakers for most and federal employees. The major exceptions to the pay freeze would be military personnel and law enforcement personnel. Here is a press release outlining the proposal to cut federal spending by as much as $125 billion.

We have also reported on a proposal in the House of Representatives to save money and reduce the federal deficit by changing the way in which the annuity payments for future federal retirees would be calculated. Under this proposal, the annuity payment would be calculated based on the “high five” for an employee’s earning years instead of the “high three” years. (See “High Three” to “High Five”?)

As of this writing, neither of the two proposals outlined above has passed into law. Readers have reacted vehemently to both proposals.

The office of Senator John Ensign (R-NV) told Government Executive late last week that the Senator will “absolutely” introduce a separate bill or an amendment to stop the federal employee pay raise in 2006.

The reality is that neither of these proposals, insofar as the impact on federal employee retirement or the 2006 pay raise, are likely to be passed into law. Both the House and the Senate have passed a bill that authorizes a 3.1 percent pay raise for federal employees next year. A few readers have written in with the opinion that it is too late for Congress to stop the pay raise for next year because it is in one of the bills passed by both chambers in Congress.

And, while the fact the 3.1 percent raise is in a bill passed by both chambers increases the likelihood the pay raise will become final, Congress is still working on the budget. At the time of this writing, anything is still possible. Senator Ensign’s pledge to introduce an amendment or new bill to halt the pay freeze is an indication the issue is not completely resolved as Congress has yet to finish its work on the 2006 budget and the federal government is largely running on a continuing resolution as a result.

There is no doubt that the proposals will gain some publicity for those legislators who will seek to gain some publicity and to enhance their reputation for wanting to cut government spending during their next election cycle. In response to those readers who have asked, it is likely active federal employees will get an average 3.1 percent pay increase next year. But it is not finalized. The process isn’t over yet.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47