New allowance could combine housing, food subsidies, eliminate 'with dependents' rate
Defense officials are considering doing away with Basic Allowance for Housing in favor of a new “locality allowance,” according to several officials familiar with the plan.
Unlike BAH, which is linked to average rental housing costs in various areas, the new allowance would be linked to the cost of living in the areas where individual troops are assigned/.../
Government models
The federal government offers a “locality pay” to civilian employees, a percentage added to basic pay. The amount is linked to a job’s location, ranging from 28 percent in New York City to 14 percent in most rural regions.
That concept is not a model for discussions about a military locality allowance. For one thing, the civilian model is calculated on the variance in local wages, while the military’s proposal would be based on cost of living.
Also, civilian locality pay is taxable, while the discussions of a military locality pay stipulate that it would be tax-free, as BAH and BAS are now.
And while civilian locality pay is defined as a percentage of base pay, Rand suggested the Pentagon ultimately could draw up specific dollar figures for each paygrade and location.
Military housing allowances can make up a far higher percentage of a service member’s total compensation than civilian locality pay does for federal employees.
For example, BAH for junior enlisted troops can amount to 30 percent to 50 percent of total monthly pay, compared to officers whose housing allowance may make up about 15 percent to 30 percent of their pay.
Harrison cautioned against taking too much money from housing allowance coffers because that cash flow is highly valued by most troops. Harrison and CSBA conducted an independent survey of troops and found that they value cash today far more than deferred or in-kind benefits, such as commissaries or a promise of future health coverage after retirement.
“Cutting cash compensation is what is going to hurt the most — that is what’s going to make troops the least happy,” Harrison said. “Cash compensation, to include basic pay and allowances, would be the last thing I’d cut, because it’s giving [DoD and taxpayers] the best value for every dollar spent.”