What is your opinion on across-the-board annual pay increases?

Do you believe across-the-board annual increases are acceptable or do you prefer a performance review or other formula?

Also, this is not for private sector jobs, but city government jobs which includes Police, Public Works, as well as all other city employees.

If you do not agree with across-the-board annual increases, please tell me why specifically, if you will, as well as your solution.