The compromise measure also includes a massive overhaul of the military health care system, but it eliminates a controversial proposal to change troops' housing allowance, leaving the military's current stipend program largely unchanged. Totaling nearly $619 billion, the bill represents lawmakers' final offer to the White House, omitting several problematic provisions debated in recent months.
DOWNLOAD: The proposed 2017 military pay chart: Every rate, every rank
But that's still about $3.2 billion more than President Barack Obama's request, setting up a potential veto. Obama has said he won't accept an increase in defense spending without corresponding increases in nonmilitary programs. If the president intends to make good on that threat, he'll have to squash several measures that would benefit the military workforce at a time when many troops and their families feel their compensation and overall quality of life have slipped.
That's because the extra money — tucked into overseas contingency funds, to get around defense spending caps — is used mainly to pay for additional pay and personnel costs. It pushes the 2017 military pay raise from the Pentagon-preferred rate of 1.6 percent to 2.1 percent, a mark equal to the projected rise in private sector wages.
If it stands, 2017 will be the first time in six years that the military pay raise tops 2 percent.
Military budget planners had said that money would be better used to pay for training and modernization costs, but lawmakers have argued that three consecutive years of pay raise trims have begun to hurt military families' finances.
Lawmakers also used the additional funds to reject Obama's plans to draw down Army and Marine Corps end strength, again to cut long-term personnel costs.
Under the final authorization draft, Army end strength would be set at 476,000 soldiers, about 16,000 more than the White House had requested for fiscal 2017.
The Marine Corps would be at 185,000 troops, an increase of about 3,000 over requested levels. The Air Force would go to 321,000 airmen, around 4,000 more than Obama wanted.
The Navy would remain at 324,000 sailors.
The defense health care overhaul would transfer control of most military medical facilities to the Defense Health Agency and put in place new fees for enrollment in Tricare. But those fees would affect only new enlistees. All current troops and retirees in the system would not see any increases.
The authorization bill also mandates a reduction in flag and general officers in years to come, trimming about 12 percent of the total now, and includes dramatic changes in defense acquisition processes. Congressional staff touted the final product as one of the most significant pieces of reform legislation in years, touching on a variety of agencies and issues.
But congressional negotiators did drop plans that would have changed even more. A Senate-led plan to award Basic Allowance for Housing stipends based on individual troops’ rent costs, instead of flat-rates based on zip codes, was removed. A provision to charge military families health care enrollment fees was similarly dismissed.
Lawmakers did include a provision to deal with the recent California National Guard bonus recoupment scandal, shifting the burden of proof for accusations of fraud or misuse to the Defense Department instead of individual troops. A hearing is scheduled on that issue next week.
The House is expected to vote on the final defense authorization bill draft on Friday, and the Senate is expected to take up the legislation next week. Whether Obama will veto the measure over the extra personnel funds will be among the last legislative decisions of his presidency.
The authorization bill sets defense policy and spending priorities for current fiscal year, but does not actually assign the money for those initiatives. The appropriations process, which distributes the money, has been stalled on Capitol Hill for months.
Over the next few days, lawmakers will need to finalize plans for a continuing resolution to extend federal spending at fiscal 2016 levels into March. Republican leaders in both chambers have said that will allow incoming President Donald Trump to set his own budget priorities for federal programs, but Pentagon leaders have lamented the move as problematic for new purchases and program starts.
Appropriations officials have already said they will adjust some budget items to provide for some increases above fiscal 2016 levels, including the military pay raise. That will go into effect on Jan. 1.
Leo Shane III covers Congress, Veterans Affairs and the White House for Military Times. He can be reached at email@example.com.