Housing allowances for military members will increase 14.7 percent on Oahu come Jan. 1 in one of the biggest jumps across the nation, the Pentagon announced Tuesday.

That means an Army or Marine sergeant with dependents who received $2,256 a month this year will receive $2,709 next month.

A lieutenant commander in the Navy or major in the Air Force with dependents who was paid $3,558 a month this year will get $3,915 a month in 2014, meanwhile.

The new "basic allowance for housing" rates average an increase of 5 percent nationally. The program will cost the Defense Department about $20 billion in calendar year 2014 and affect nearly 1 million service members, said Cheryl Anne Woehr, the Pentagon’s BAH program manager.

BAH rates are based on the cost of housing for civilians in 306 areas of the country with significant military populations. Rate adjustments take into account factors including data gathered from property managers for vacancies in each state, costs of utilities and renter’s insurance, the Defense Department said.

"BAH is designed to assist service members assigned to permanent duty stations within the United States with acquiring housing comparable to civilians in the same income range at that location," Navy Lt. Cmdr. Nate Christensen, a Pentagon spokesman, said in a military-produced news story announcing the rate increase.

The biggest BAH area increase for 2014 is in Mobile, Ala., with an average 14.9 percent increase. Honolulu County is increasing 14.7 percent, and Minneapolis-St. Paul’s housing allowance will rise 14.5 percent.

Sacramento, Calif., is dropping 7.7 percent, and Yuma, Ariz., will see a 6.1 percent decrease, the Pentagon said.

Officials did not offer a specific rationale for increasing the Hawaii housing allowance in the Tuesday announcement.

The Oahu increase comes at a time when military housing allowances may be affecting some rent prices here.

Also left unaddressed is how the Pentagon plans to reconcile overall housing allowance increases with rising personnel costs in an era of reduced military budgets.

Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, told the Wall Street Journal last month that the cost of military personnel could soon rise to 60 percent of the defense budget from 50 percent. He said the Pentagon in February will release details of a plan to curb pay and benefits. 

BAH offsets the cost of housing when a service member does not receive government-provided housing and varies by location, pay grade and dependents.

The Pentagon announced a major fiscal 2001 budget initiative to eliminate out-of-pocket costs for off-base housing.

The change reduced that out-of-pocket cost from an average of 18.8 percent of monthly costs in 2000 to

15 percent in 2001, with continued reductions in subsequent years. Average out-of-pocket housing costs were eliminated entirely in 2005 with wars raging in Iraq and Afghanistan.

Then-Deputy Defense Secretary Ash Carter told Military Times in August that the Pentagon was looking for ways to scale back BAH. The publication said if troops began covering 5 to 10 percent of the cost, the Pentagon could see between $10 billion and $20 billion in savings over a decade.

Eugene Tian, a state economist, said military members rent about 32,000 of the 133,395 units that are rented out on Oahu.

Given the amount of military housing allowances, "it’s a little difficult for local residents to compete," he said. Tian added, however, that he’s not sure just how much military BAH affects rent levels.

Marine Corps Maj. Pam Marshall, who works on the Kaneohe Bay base and lives in Kailua, gets $2,856 a month now and will receive $3,216 next month.

Marshall said for Marines and sailors stationed at Marine Corps Base Hawaii, "it is extremely convenient to live in either Kailua or Kaneohe, both of which are beautiful locations."

The current and proposed BAH levels "give us the option to live near our workplace in a known, high-cost area," she said in an email.

Kailua has had service members as residents since the 1940s, and is popular overall given its proximity to the beach, she notes.

"Landlords who follow BAH rates may be thrilled

to have military tenants with a guaranteed paycheck, as well as Realtors who sell to and for the military," Marshall said. "Fixed BAH rates may influence housing costs near all U.S. bases, but it’s anyone’s guess to what extent."