Tag: BAH

Hopefully the House shoots down this BAH plan because all it is going to do is increase paperwork for troops, cause personnel to rent larger houses than they need and then inflate the housing market around military bases while taking money out of soldiers’ pockets:

A leading defense analyst is calling the Senate’s plan to reform military housing allowances a potential disaster for troops’ finances.

The proposal, included in the Senate draft of the fiscal 2017 defense authorization act, would require the Defense Department to reimburse only troops’ exact rent and utilities costs, instead of issuing stipends that estimate cost of living in different areas.

The move could pull hundreds of dollars a month out of some families’ military payouts, although Senate planners argue those troops are receiving more than their share of housing costs.

But Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies, in an editorial in Politico this week called the housing plan “perhaps the most misguided proposal with the greatest potential for unintended consequences” in the annual budget bill.

“What the Senate proposal fails to recognize is that the housing allowance, despite its name, is not really about housing at all,” he wrote. “Congress has used the housing allowance to increase cash compensation for the military, and it’s a smart way to do that because it doesn’t incur additional liability for retirement pensions.”  [Army Times]

The only part of this plan that I think the Senate has a fair point is having one BAH for dual military married couples.  That is a harder entitlement to defend considering just one housing allowance is needed to provide housing just like soldiers who are not married to another servicemember do.

For servicemembers who rely on their BAH for some extra cash by living in a smaller home than what you could afford with your stipend, get ready because Congress is coming to take that money from you:

Senate lawmakers want to radically overhaul how military housing stipends are awarded and end the practice of troops pocketing extra cash from the payouts.

The plan is tucked into the Senate’s pending draft of the annual defense authorization measure, and hasn’t received the same attention as major military health care and acquisition reforms also included in the legislation.

But it has the potential to change housing stipend totals for nearly every service member in coming years, with some potentially losing hundreds of dollars a month. And it comes after a series of pay and benefits trims in recent years that have left advocates frustrated about increased financial strain on military families.

Instead of the current Basic Allowance for Housing system, which assigns flat-rate stipends for zip codes across the country based on troops’ rank and family status, the new proposal would move closer to the military’s Overseas Housing Allowance. That system sets maximum payable stipends but awards troops only for their actual expenses, making recipients provide proof of what they pay in rent and utilities costs.

Dual military couples and service members who room with friends would not be able to game the system either. They’d see their individual stipend cut in half, adjusted to cover just their actual costs and nothing more.  [Military Times]

You can read more at the link, but this will do little to save any money and instead take money from troops to give to realtors.  I would not be surprised if the real estate lobby is behind this change.  That is because what will happen is that the realtors will make sure the rent for a home matches what the servicemembers maximum BAH rate is.  This will in turn drive up rental rates across the city as well which will bring in more money for realtors from civilians trying to find a place to rent.

This already happens in Korea with the Overseas Housing Allowance (OHA) which has led to realtors being put off limits for colluding with property owners.  I also wonder how this affects servicemembers who own homes?  Will they be allowed to use the BAH to pay their mortgage?  What if they have the house paid off?  Will they have their BAH cancelled?

It seems to me that if Congress wants to save money than tax whatever the remaining BAH is as income.  For example if someone’s BAH is $2,000 and rents a house for $1,500 than tax the extra $500 as earned income.  This would keep money in troops pockets and not artificially increase rental rates across an entire community plus put money back in the treasury.  This makes too much sense so it probably will not happen.