Some are and some aren't. It's really not the basic pay that is kicking the ass of the States and cities, it's the high defined benefit levels and early eligility age of their retirement programs.
The Fed system is entirely different than most of the state ones, the minimum retirement age is higher and rising, and since the mid-80s they have a very limited defined benefit (1% per year of service, slightly higher for law enforcement and firemen and with a slightly younger eligibility age, with a big chunk of the retirement payoff being in the form of payout on a contributory investment/savings plan).
There are big structural differences in how the Fed system works vs. State/local and also vs. private sector. At least in DOD, outside the trades or critical life-support stuff, overtime is almost unheard-of, so the basic pay is basically all the pay you normally expect to get, i.e. the top end is a totally-known quantity each year. State/municipal jobs generally seem to involve MUCH poorer control of overtime costs, which is a bleeding wound in their budgets, but there is also a lot more scope for buddy networks and corruption to affect approval and abuse of it in those kind of organizations; on the downside, since the Fed worker's hours don't directly generate a profit but deliver a service (Often internally to the organization) it is much more difficult to justify overtime when it really is needed than is the case in the private sector, where output and income are directly connected.
The Feds also have a rather-outdated lifetime employment model where after a certain point the job is treated as a lifetime entitlement from which you can only be removed for good cause, instead of more modern and flexible approaches like a periodically-renewable contract. This makes Fed sector employment most attractive to those who want a very stable employment but are willing to accept a pretty flat pay curve over their careers in exchange. The flat pay curve tends to over-reward the more junior and under-reward the more senior. Workforce flexibility is non-existent, since the employment model makes it impossible to lay off any significant number of employees without a very-extended notice period (And if not correctly-executed, the notice becomes void and you're back at Square One), which is why contractors are so heavily used, as they can be turned on or off very quickly.
The last attempt to make this Fed system more flexible was limited to DOD (The so-called 'NSPS' system) and was a disaster, chuck full of unresolved structural problems, inherent conflicts, and logical flaws. It was basically written for the personal advantage of the people inside the Beltway who concocted it, but at the expense of completely screwing over everyone else. On top of everything else, it actually increased the problem of cronyism and worked against the supposedly-sacrosanct merit principles by divorcing the chain of actual supervision from the chain making decisions about rewards.
