POULSBO — A wage contract between the City of Poulsbo and Poulsbo Police Officers Association is expected to go to arbitration in early 2011 after more than a year of negotiations led to no agreement.

The impasse comes as the city struggles to keep its labor costs down and balance its 2011 budget.

Poulsbo Mayor Becky Erickson said the city posed a “fair offer” but was declined by the association.

The offer included a 1.7 percent wage increase for patrol officers and a 4.7 percent wage increase for sergeants, but “they said it wasn’t enough,” Erickson said.

“We have people losing their jobs and they want raises … now is not the time to ask for a raise,” she said.

The city has restructured its workforce, cutting staff by roughly 10 percent to shore up its 2011 budget. City employees other than police officers are represented by Teamsters, and agreed to a zero percent raise in wages in 2010 and a 1 percent raise in wages in 2011.

Erickson said she values the city’s police force, but financial constraints are limiting.

The officers association has challenged the city’s layoffs, and released a letter in September suggesting they aren’t financially necessary. The association asserts an acceptable middle ground has not been reached in contract discussions.

Poulsbo Police Officers Association President Dan LaFrance said he is hopeful the city and association can come to terms before arbitration is necessary, but the contract the association turned down would have ultimately meant a cut for officers in the form a 3 percent decrease in benefits.

The city and association began discussions in mid-2009. The duration of the contract has not been settled, though it will affect 2010, meaning officers could receive backpay once an agreement is reached.

The city last went to arbitration over a police association contract in 2002, said Human Resources Manager Deanna Kingery. Negotiations for that contract began mid-2000, and a contract was signed in Oct. 2002.

Arbitration can cost upwards of $20,000 to $40,000, Kingery estimated.

Poulsbo’s 11 patrol officers currently earn $31.07 an hour, and its three sergeants earn $35.36 an hour, Kingery said.

LaFrance said both the city and association agreed on a collection of wage statistics from a list of cities comparable to Poulsbo, and hoped the final contract would be closer to the middle of that range.

He said arbitration often leaves both sides unhappy.

“It’s never a win-win situation. It’s kind of Solomon game,” he said.

He said the association believes the city is still growing and doesn’t require a drastic reduction in staffing, which is why the association is pushing for higher numbers. He said it could be difficult for the city to prove its budgetary crisis in arbitration.

“As far as getting a wage increase after they’ve laid people off, that ties into why we had a real hard time stomaching the layoffs,” he said.

He suggested both sides have room for compromise, but municipal dollars aren’t given freely.

“You have to actually fight for your wages,” he said.