With inflation hovering around 7% over the past 12 months, Congress made sure military members and Department of Defense employees got more money in pay and benefits for next year. The Senate Committee on Appropriations released the $1.7 trillion 2023 omnibus appropriations bill Dec. 20 with a significant increase in defense spending that reflects rising costs and the ongoing commitment to aiding Ukraine.

The defense portion of the bill includes nearly $8 billion to address inflation and other cost increases above the President’s budget request, including assistance to military families, fuel and utilities for DoD, services, medical inflation, procurement and R&D programs.

Both military and civilian personnel DoDwide will be getting a 4.6% pay raise, and the bill includes an 11% increase for military personnel to help offset the costs of higher rent and food prices. Those additional funds are going to significant hikes in the non-taxable Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence that servicemembers receive. Those subsidies are tied to costs of food and housing, and vary depending on geographic location. BAH will increase an average of 12% although housing in some parts of the country have gone up over 20% this year.

The pay and benefit increases come as military leaders voiced concerns over rising costs of living for service members and a tight job market that they believe contributed to falling recruitment numbers.

“The pain of inflation on American families is real, and it is being felt right now across the federal government,” said Senate Appropriations Committee Chairman Patrick Leahy (D-Vt.) in a written statement.

Of the spending for military personnel, $1.75 billion will go to defray the impact of inflation on service members and their families. An additional $687 million goes to DoD school construction, and $210 million goes toward reducing the price of food at commissaries.

Overall, the omnibus includes $858 billion in defense funding for 2023, up from $782 billion for the 2022 DoD budget. In 2022, the government ran on a continuing resolution through the early part of the year and Congress didn’t pass the budget until March.

The total defense budget includes $797.7 billion in discretionary spending, an increase of $69.3 billion above 2022. The package includes $27.9 billion as part of the fourth Ukraine supplemental and $106.2 million to repair Navy, Army Reserve and Army National Guard facilities in Florida, Georgia, North Carolina, Puerto Rico and Virginia that saw damage from hurricanes.

The total discretionary amount is $24.7 billion more than originally requested in President Joe Biden’s 2023 budget proposal. DoD officials sounded the alarm earlier this month about the perils of a year-long continuing resolution. They cited concerns about stalled building projects, funds for research and development and continued aid to Ukraine that would be jeopardized without a new budget.

The budget reflects the hardships of inflation in a wide variety of areas, as lawmakers looked to adjust costs for prices that have gone up over the year.

Congress appropriated DoD acquisition programs more than $1 billion in extra funding to help address inflation. DoD and contractors faced soaring overhead costs, particularly for fixed-price contracts. The Pentagon tried to alleviate some of the impacts of inflation by issuing new policies to adjust to the rising costs of some products and services.

The joint explanatory statement from the Senate Committee on Appropriations, which offers some justification for specific parts of the budget, laid out concerns that costs would continue to creep up.

“The undersecretary of defense (comptroller) is directed to continue working with the congressional defense committees to refine pricing shortfall estimates caused by revised economic assumptions through the second quarter of 2023,” read the statement.

Although most parts of the country have seen a drop in the price of gas, fuel costs that spiked over the past year resulted in Congress adding $3.7 billion to the defense budget to cover increases in fuel costs.

Congress passed a second continuing resolution on Dec. 15 to keep the government running while they hammered out a new budget. The omnibus bill needs to pass Congress by Dec. 23 to avoid a partial government shutdown or pass another continuous resolution.

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