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.But the problem could be considerably worse for those living on military bases. Companies that have been contracted to manage base housing may have problems meeting their debt payments. You know what that means - potential bankruptcy.
Do we have a mini-housing crisis brewing on federal property?
In President Obama's 2015 budget proposal, there are several cuts to the military compensation package. Ironically, these supposed savings (really an attempt to shift costs from the government to the active duty service member and family) do nothing to reduce the deficit. The overall budget for the Department of Defense would rise in this proposal. So the cuts being made to military families are being sold as necessary to shore up training and to purchase new equipment. Basically bullets before benefits.
Rather than making sure corporations don't escape paying taxes or that defense contractors who have made billions of dollars off of two wars didn't cheat the government, we would rather just nickel and dime military families to death.
All those nickels and dimes add up and for a company that relies on receiving a full Basic Allowance for Housing from our military families, it may be a death knell. Last year, before a cut was officially proposed, companies were already concerned about making their debt payments because the rental prices (and therefore government BAHs) were dropping in many markets:
A big potential stumbling block for overhauling BAH is the possible impact on privatized housing. Since the 1990s, DoD has signed contracts to turn over thousands of on-base housing units to private companies that promise to remodel, repair and maintain those homes in exchange for receiving a steady stream of service members’ BAH payments.These companies have few solutions. They were promised by the Department of Defense that Congress was highly unlikely to change the laws (sort of like retirees back pre-1990's being told that they would receive free health care for life, but I digress). And they are strictly prohibited from raising rents to cover the difference:
Those companies depend on BAH payments as their primary source of revenue, and any substantial reduction could result in fewer renovations, fewer amenities or longer wait times for maintenance.
In some areas where BAH rates have fallen in recent years due to plummeting housing prices, those companies have reduced some services, claiming that making their own debt payments would be impossible otherwise.
Operators of housing on military facilities also are worried. They tie the rents they charge to the housing allowance, so any BAH reductions would weigh on income, said John Picerne, chief executive of Corvias Military Living, a developer that operates 20,000 Army units and 5,000 Air Force units. He said Corvias could be forced to cut services to cover debt payments on money it borrowed to build the military housing.Truthout recently wrote about the troubles of military privatized housing, including troubling news that private contractors were not forwarding money owed to the government. It seems like we might be digging an even bigger pit if cuts to BAH are allowed to make into the FY2015 Defense Budget.
Because of the contracts Corvias signed with the government, raising rents to cover the difference is prohibited, Mr. Picerne said. Therefore, maintaining current services, ranging from lawn care to emergency maintenance, "would be tremendously difficult for us to handle," he said.
Many of our Representatives and Senators are unaware of this problem. Please help educate them and their staff about the potential meltdown waiting if they decided to include these types of cuts into next year's budget. If you need a little help knowing what to say, please feel free to use this resource at usmclife.com. And, as always, thanks for reading! Military families value your support!