Updated: February 2, 2017
Today, December 7, 2016, the United States Senate invoked cloture for the Conference report relating to the 2017 National Defense Authorization Act (NDAA) by a vote of 92-7. The cloture will allow for minimal debate and should bring a final vote by close of business Friday.
On Friday, December 2nd, the full House passed the reconciled bill by an overwhelming vote of 375-34. The bill is expected to pass the full Senate with equal enthusiasm. Once passed by the Senate, the 2017 NDAA will be forwarded to President Obama for signature.
The Conference report is a reconciliation of differences between the House of Representative and Senate bills. The reconciled bill adopts, amoung many other items, the House’s desire for a 2.1 percent military basic pay raise for 2017 which is one half percent higher than what was requested by the Department of Defense budget input and later set by President Obama on August 31, 2016.
The FY-2017 Conference Report also contains a request of the Department of Defense to supply data that may be used to develop a military “single-salary pay system”. The system assumes the repeal of both Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence (BAS) which assumedly would be lumped into a new “single-salary” — replacing the current basic pay + BAH + BAS model the military currently uses.
If a single-salary system is adopted, I suspect it would be a system more inline with federal civilian employees, but moving to such a system would have serious effects on the military member.
The first issue is taxes. Currently, Basic Allowance for Housing and Subsistence are non-taxable, and by lumping them into a Servicemember’s “single-salary” presumably increases the amount of taxes the Member would be accountable for. It would tax what was before not taxed. The addition of BAH and BAS to one’s income calculation may also propel the Member into a higher tax bracket — a potential burden for sure.
Second issue is retirement pay. Currently, each of the retirement plans allow for a certain percentage of basic pay after completing a predetermined amount of years of service. The Conference Report’s request for data asks for “Necessary modifications to the military retirement system, including the retired pay multiplier, to ensure that members of the Armed Forces under the pay structure are situated similarly to where they would otherwise be under the military retirement system…” (section (c)(3) below). I foresee many issues with those who remain on a “High Three” retirement plan having to accept anything less than 50 percent at 20 years even if the monies were to be the same.
I am sure there are many other issues I haven’t even considered yet, but military pay may soon see its most significant shake up since the Career Compensation Act of 1949.
From the Conference Report:
SEC. 604. REPORTS ON A NEW SINGLE-SALARY PAY SYSTEM FOR MEMBERS OF THE ARMED FORCES.
- (a) Report on Plan To Implement New Pay Structure.–Not later than March 1, 2017, the Secretary of Defense shall submit to the Committees on Armed Services of the Senate and the House of Representative a report that sets forth the following:
- (1) The military pay tables as of January 1, 2017, reflecting the Regular Military Compensation of members of the Armed Forces as of that date in the range of grades, dependency statuses, and assignment locations.
- (2) A comprehensive description of the manner in which the Department of Defense would begin, by not later than January 1, 2018, to implement a transition between the current pay structure for members of the Armed Forces and a new pay structure for members of the Armed Forces as provided for by this section.
- (b) Report on Elements of New Pay Structure.–Not later than January 1, 2018, the Secretary shall submit to the Committees on Armed Services of the Senate and the House of Representative a report that sets forth the following:
- (1) A description and comparison of the current pay structure for members of the Armed Forces and a new pay structure for members of the Armed Forces, including new pay tables, that uses a single-salary pay system (as adjusted by the same cost-of-living adjustment that the Department of Defense uses worldwide for civilian employees) based on the assumptions in subsection (c).
- (2) A proposal for such legislative and administrative action as the Secretary considers appropriate to implement the new pay structure, and to provide for a transition between the current pay structure and the new pay structure.
- (3) A comprehensive schedule for the implementation of the new pay structure and for the transition between the current pay structure and the new pay structure, including all significant deadlines.
- (c) New Pay Structure.–The new pay structure described pursuant to subsection (b)(1) shall assume the repeal of the basic allowance for housing and basic allowance subsistence for members of the Armed Forces in favor of a single-salary pay system, and shall include the following:
- (1) A statement of pay comparability with the civilian sector adequate to effectively recruit and retain a high-quality All-Volunteer Force.
- (2) The level of pay necessary by grade and years of service to meet pay comparability as described in paragraph (1) in order to recruit and retain a high-quality All-Volunteer Force.
- (3) Necessary modifications to the military retirement system, including the retired pay multiplier, to ensure that members of the Armed Forces under the pay structure are situated similarly to where they would otherwise be under the military retirement system that will take effect on January 1, 2018, by reason part I of subtitle D of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114-92; 129 Stat. 842), and the amendments made by that part.
- (d) Cost Containment.–The single-salary pay system under the new pay structure provided for by this section shall be a single-salary pay system that will result in no or minimal additional costs to the Government, both in terms of annual discretionary outlays and entitlements, when compared with the continuation of the current pay system for members of the Armed Forces.