NORFOLK, Va. — The defense industry in Hampton Roads — jittery about big reductions in military spending — likes what it sees in Congress's first attempt to draft a defense spending plan for 2015. Rank-and-file sailors probably do, too.
The proposal approved by a House committee last week would keep intact most major purchase contracts and calls for bigger pay raises, in contrast to what the Pentagon wants. But it would do it at the expense of training and operations for active-duty commands.
The congressional changes would include cutting $1.4 billion from the military's budget for operations, maintenance and training, and redirecting most of that money to procurement.
Under the terms of a defense authorization bill expected to come before the House next week, Navy ship overhauls in private shipyards would continue on schedule, and the construction and refueling of aircraft carriers at Newport News Shipbuilding would be funded.
But nobody should be popping champagne corks, said Craig Quigley, executive director of the Hampton Roads Military and Federal Facilities Alliance. Even if the bill approved last week by the House Armed Services Committee stayed intact, it would leave unsettled what would happen in late 2015 when automatic spending cuts, known as sequestration, begin anew.
"Somebody is going to have to pay up" in 2016, said Bill Crow, president of the Virginia Ship Repair Association. "It could get real ugly."
The budget policy bill, which may come up for a House vote next week, would authorize $601 billion for defense. It stays under limits agreed to by Congress last year but would allocate funds differently than Pentagon leaders have requested. The military's proposals to take several ships and types of aircraft out of service were rejected, as was a request for another round of base closings, which leaders say would reduce military spending during a post-war slowdown.
U.S. Rep. Randy Forbes, R-Chesapeake, successfully proposed changes that would block the Navy's plans to mothball 11 of its 22 guided missile cruisers, including some stationed in Norfolk, and three amphibious ships. Forbes' proposal also called for modernizing two cruisers next year.
The Navy wants to take the cruisers out of service and gradually modernize them before putting them back into the fleet, which it estimates would save $4 billion.
The House panel also agreed to add $796 million to next year's budget to begin the midlife refueling of the carrier George Washington at Newport News Shipbuilding. The Obama administration had not included the refueling in its spending plan, saying that unless sequestration was resolved, there wouldn't be enough money to do the job.
The House committee also turned down a proposal, strongly endorsed by the Joint Chiefs of Staff, to give most members of the military a 1 percent raise and trim some benefits to save $2 billion.
The panel's bill would provide a 1.8 percent pay raise while keeping intact health care and housing benefits and not making a steep cut in a commissary subsidy.
Quigley, a retired rear admiral, predicted that cutting into readiness would mean less money for flying and steaming and cuts in training at all levels.
It is a risk, he said, to devote more funds to equipment, such as ships and aircraft that can take years to construct, while spending less to train the people needed to operate them. It may be that, in a time of crisis, it would be quicker to train people than to build equipment from scratch.
"I'm not saying it's a simple thing," he said.
Ship-repair yards in Hampton Roads and other large domestic Navy ports wouldn't see a change, said Crow, a retired Navy officer. The yards and their subcontractors, which employ thousands, would have steady Navy work through 2015, he said.
Mike Petters, CEO of Huntington Ingalls Industries — Newport News Shipbuilding's parent company — said he's pleased with the House panel's proposal but noted that it's a long way from becoming reality.
"The process from here is a full-contact sport through the end of the year," Petters said.
As the House considers its bill, the Senate Armed Services Committee is expected to begin working on its version of the policy legislation next week.
Sen. Tim Kaine, a committee member, said he'll press for the funding to overhaul the George Washington.
He also predicts that the Senate will follow the House's lead and reject the Pentagon's proposals for pay and benefit adjustments.
For more than a year, top military brass have warned that the Pentagon can't sustain rising personnel and health care costs. Kaine acknowledged that there is "an important day of reckoning coming" in dealing with that expense.
But the Senate is reluctant to make changes until a special commission studying military pay and compensation completes its work next February, he said. Kaine has requested that the panel conduct a broad survey of service members that would be given to Congress.
What may be a harder task is budgeting for 2016, when the Pentagon will have to make billions of dollars' more in cuts because of the demands of sequestration. The cuts are required under legislation approved in 2011 that demands that $1 trillion be cut over 10 years, with about half coming from defense.
Congress has been unable to find a compromise that could replace the sequestration process because of strong ideological disagreements when considering whether to raise more revenue, cut specific federal programs, or a combination.
Kaine, a Democrat who also sits on the Senate Budget Committee, noted that Congress was able to reach a budget deal last year that blunted some of the defense cuts for 2014 and 2015.
"I'm going into this with the belief that we're going to figure out how to do it again," he said. "I may be right. I may be wrong."