The FY2014 DoD base budget request released yesterday totals $526.6 billion for discretionary budget authority. This is $0.9 billion lower than the FY2013 enacted amount of $527.5 billion.
The budget request also includes an $88 billion funding placeholder for Overseas Contingency Operations (OCO), about the same as FY2013 amount. The full detailed request for OCO will be submitted in the next few week and will reflect the latest decisions about force levels in Afghanistan.
DoD’s new five-year budget plan (FY2014 to FY2018) represents a $35 billion total reduction from last year’s plan.
In remarks accompanying release of the budget, Defense Secretary Chuck Hagel said the budget request “continues to balance competing needs of supporting our troops in Afghanistan, implementing the President’s defense strategic balance, and sustaining the quality of the all-volunteer force.”
Hagel acknowledged that the FY2014 budget an along-term plan was prepaid while much uncertain exists about the future of DoD budgets. He said the president’s total federal budget plan, if enacted, “would permit Congress to eliminate sequestration.” However, if sequestration is not averted, the FY2014 budget would be cut by $52 billion. Over 10 years, Hagel warned, sequestration cuts could reach $500 billion.
The FY2014 budget request is 1.8 percent lower in real terms (after adjusting for inflation) than the FY2013 enacted level. Under the proposed budget plan, DoD real growth would increase by 1.3 percent in FY2015 and by 0.2 percent in FY2016. However, real growth would decline by 0.3 percent in FY2017 and by 0.5 percent in FY2018.
The Air Force’s budget is the only Military Service budget to increase in FY2014. The Air Force base budget request is $144.4 billion (27% of the total DoD budget), up $4.6 billion. The Army’s budget request totals $129. billion (24.6%) and declines by $2.3 billion. The Navy’s budget (including he Marine Corps) totals $155.8 billion (29.6%). $3.1 billion lower than the FY2013 enacted level. The budget request for Defense-wide accounts is $96.8 billion (18.4%), only $154 million below the previous year.
The FY2014 DoD budget supports a percent pay raise for military personnel and a 1 percent pay increase for civilian employees. Civilian pay has been frozen for the last three years. The budget would increase servicemembers’ housing allowance by 4.2 percent and the subsistence allowance by 3.4 percent.
In his press briefing on the budget, DoD Comptroller Bob Hale discussed savings initiatives to reduce the high costs of providing health care and maintaining DoD’s infrastructure.
In FY2013, Congress approved small increases in TRICARE Prime enrollment fees for working-age retirees and in mail-order pharmacy co-pays. However, it rejected other proposed changes to achieve larger savings. However, it rejected other TRICARE-related changes designed to achieve larger savings. In the FY2014 budget, the administration asks Congress to reconsider its position on heath care savings initiatives. The budget proposes to: increase the TRICARE Prime enrollment fee; implement an enrollment fee for TRICARE Stand/Extra; increase TRICARE Standard/Extra deductibles; increase co-pays for retiree TRICARE Prime non-mental health office visits; increase pharmaceuticals co-pays for servicemembers not on active duty; and implement an enrollment fee for new TRICARE-for-Life beneficiaries. Fee changes would be phased in over several years and fees, deductibles, ad pharmaceutical co-pays would be indexed to retiree COLAs.
Hale also stressed that DoD must consolidate its infrastructure to reduce costs. “The only effective way to do that is through Base Realignment and Closure (BRAC),” Hale said. DoD is asking Congress to approve a new BRAC round in FY2015. Funds have been included in FY2016-2018 for BRAC costs, Hale emphasized. In last year’s budget request DoD proposed a new BRAC round. However, after widespread congressional opposition, then Secretary of Defense Leon Panetta stopped pursuing the idea on the Hill. It is uncertain if Congress this year will be receptive to another BRAC.
The budget also reinforces DoD’s commitment to achieving audit ready budget statements by the end of FY2014 and ensuring tat all financial statements are audit ready by the end of FY2017. Hale acknowledged that progress is being hindered by the current budget chaos, but said DoD is “making a lot of progress to achieve audit able financial statements.”
Additional detail (including Military Service briefings) on the FY2014 DoD budget request is available on the DoD Comptroller website.