Congress returns today to wrap up the fiscal 2005 catchall spending bill that will provide federal employees with an average 3.5 percent pay raise next year.
Although Congress approved the bill before breaking for the Thanksgiving holiday, objections to one provision will require a correction before the multibillion-dollar spending bill goes to President Bush, who is expected to sign the bill.
 
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Once the bill clears the White House, the president's pay advisers will prepare an executive order that will split the 3.5 percent increase into two components: an across-the-board raise that goes to all General Schedule employees and a "locality pay" adjustment that varies according to where an employee works.
The debate over what size of a raise to provide federal employees was tougher this year. Bush opened the debate by proposing a 1.5 percent raise for the civil service, an increase that his budget aides said would be sufficient to protect employees from inflation. Congress, however, opted to put the civil service on par with the 3.5 percent military raise.
As in previous years, the Washington area delegation pushed for a higher civil service raise. A number of lawmakers played pivotal roles, including Reps. Steny H. Hoyer (D-Md.), Frank R. Wolf (R-Va.), Thomas M. Davis III (R-Va.), James P. Moran Jr. (D-Va.) and the senators from Maryland and Virginia.
The path to the 2006 pay raise might be even more bumpy. Federal employees have been fortunate that the leaders of the Appropriations committees -- Rep. C.W. Bill Young (R-Fla.) and Sen. Ted Stevens (R-Alaska) -- have consistently supported the concept of "pay parity" in setting civil service and military raises. Both, however, will step down from their chairmanships next year.
This year's pay debate also has been marked by confusion. The most recent example came Nov. 30 when Bush sent a letter to Congress that called for a 2.5 percent raise and no locality increase next year. A number of federal employees called or sent e-mails saying they were alarmed or perplexed by the president's letter.
The letter, to some extent, was a procedural device. Federal pay law requires the president to set a locality pay adjustment by Nov. 30 if Congress has not sent pay-raise legislation to the White House by that date. Since he had not received the catchall bill, Bush opted to issue "an alternative plan" that would stop a formula set in pay law from taking effect.
The pay law formula calls for an average 10.6 percent increase in locality pay next year -- and would have led to a 13.1 percent raise overall, far higher than what the White House or Congress could tolerate at a time when the budget is spilling red ink.
The locality pay formula "would cost about $9.8 billion in fiscal year 2005 alone and would build in later years," Bush said in his letter. That would have diverted money from the conflicts in Iraq and Afghanistan and hindered the government's ability to fight the war on terrorism, Bush said.
In his letter, Bush took a parting shot at Congress for overriding his 2005 pay plan. "Since the Congress has not funded the cost of a pay raise in excess of the 1.5 percent increase I proposed, agencies would have to absorb the additional cost and could have to freeze hiring in order to pay the higher rates," Bush wrote.
Jumbo Payout at IRS?
The National Treasury Employees Union has won an arbitration decision that could give $6.7 million to more than 40,000 workers at the Internal Revenue Service, the union has announced.
The decision grew out of a dispute between the IRS and the union over whether the proper amount of money was being set aside for awards that recognize good performance by IRS employees. The bonus program is part of the contract between the IRS and NTEU and provides for bonuses to go to the top 55 percent of IRS employees. The awards are determined by their job evaluations and other factors.
Arbitrator Jerome H. Ross of McLean agreed with the union that the IRS had "under-funded" the awards program. He gave the union and the IRS 30 days to agree on how to implement his decision.
If an agreement is not reached, the IRS can appeal to the Federal Labor Relations Authority. IRS spokesman Anthony Burke said: "It is premature to consider appeal options."
In his decision, Ross said the IRS distributed more than $51 million to IRS employees in fiscal 2003 under the awards program.
HSA Work Sheet
Figuring out the advantages of health savings accounts can be daunting. To help employees and retirees, the Office of Personnel Management has posted a new work sheet on its Web site, www.opm.gov/hsa/. The work sheet helps make comparisons among different high-deductible health plans and with traditional health plans.
E-mail: barrs@washpost.com
