Phasing out COLA program proposed for Federal Workers

Article in today's Advertiser about phasing out COLA.

"The cost-of-living adjustment received by thousands of federal white-collar workers in Hawai'i would be phased out and replaced by other payments under legislation proposed by the Bush administration.

The measure, proposed Wednesday, would phase out the COLA program over a seven-year-period for workers here, in Alaska and Guam and other U.S. territories. At the same time, the workers would begin receiving so-called "locality" payments, which boost salaries based on surveys of what's paid by the private sector in local markets."

An example - A GS-12 , step 5 making $63,809 in base pay gets 25% COLA - $15,847 which isn't federally taxed. If we received 25% Locality pay instead of COLA, that would equate to $3,962 at the 25% tax rate which would be lost. Of course your retirement pay would be a little higher because the locality pay would be factored into it but I would rather have the COLA over the long run. We'll just have to wait and see what happens.