The city's proposed new four-year contract with the Portland Police Association is finally expected to become official next week—later than initially expected, the Mercury has learned, after some last-minute heartburn over a new provision ending payouts for time off earned while working holidays.

Anna Kanwit, director of the Bureau of Human Resources, confirmed that city officials realized a potentially expensive loophole in that provision while parsing through the "tentative agreement" [part 1 (pdf); part 2 (pdf)] the two sides reached on the contract earlier this fall.

Starting January 1, Kanwit says, officers will no longer be able to cash out time off earned for working holiday absent a formal agreement with the city. And that time off will be capped at 60 hours. That's the easy part. The hard part is what happens to all the so-called "compensatory time" cops already have on the books. And that issue, if it breaks the wrong way for the city, could cost just shy of $1 million, Kanwit says.

The deal with the union attacks that time off in two ways: First off, anything over 60 hours will be automatically cashed out. That's a measurable, budgeted hit. The wild card, Kanwit says, is what officers do with the remaining 60 hours. Historically, just 39 percent of officers have cashed out their holiday time instead of banking it for vacations. But now that the other 61 percent know they're losing the option? They might all decide to cash in.

Both sides tentatively signed the deal in October. PPA members ratified the terms (77 percent of members who voted said yes) in late November. But Kanwit says that million-dollar gave everyone pause in the past few weeks since the union voted.

"Our discussion was if there was something we should do to mitigate it," she says, saying the answer was "no," that it didn't make sense to reopen the agreement. "It's a one-time hit."

PPA President Daryl Turner has not replied to requests for comment on the contract, saying he was "busy" the one time he did pick up the phone.

The provision for holiday time cash-outs—which cost the police bureau about $1.2 million a year, but with the promise that it could vary—was among the more important subjects in negotiations. The cash-outs were added in the last contract, approved in 2011, but they proved difficult to budget, Kanwit says. That was borne out by a budget review in 2012 that blamed the provision for a huge surge in surprise costs in the police budget.

Aside from granting new cost-of-living salary increases, Kanwit says BHR was committed to not putting "new money in this contract."

So with Turner and his team interested in adding premiums and perks—hazard pay, premiums for sergeants who now have more responsibility under federal reforms, canine handler pay, more money for working odd shifts, and more pay for long-tenured cops—that $1.2 million emerged as the best bargaining chip.

That trade "all works," Kanwit says, "and it's cost neutral."

Kanwit did make sure to point out another cut, however. A controversial "fitness" premium, which ballooned into a $583,000 annual expense after it turned out cops would qualify merely for undergoing blood pressure tests and other exams, was erased from the deal and not part of the discussion over premiums.

A figure for the cost-of-living increase has not been provided. I've called the city's budget director, Andrew Scott, for more information. During the last contract, different interpretations of the contract led to some wildly different figures for how much the PPA contract would cost.

But Kanwit and a spokesman for Mayor Charlie Hales, Dana Haynes, both insist that such an increase has previously been factored into city budget forecasts.

"They zeroed out the revenue impact," Haynes says.

Kanwit acknowledged the other difficulty looming over these contract talks: federal reforms, including the prospect of a federal trial over how police use force. A deal with the union seems to have averted that possibility with the union agreeing not to use its contract to challenge changes in use of force policies and training and the addition of a "discipline matrix."

Kanwit and Haynes both pointed to another concession: For the first year of the contract, like all other unions, the city is awarding half of the state's indexed cost of living increase. And that won't even apply to the beginning of this fiscal year. It'll be retroactive to August 29, about when most of the contract was jointly tentatively approved. Perks and premiums won't take effect until January 1, another departure.

The city's goal, she says, was to encourage unions to settle quickly. Last time, the PPA and city ratified their contract almost a year after the previous one expired.

"It sends a strong message to the unions," she says, "that it's important to get bargaining done."