THE CITY'S labor negotiators had the basic shape of a new four-year contract with the Portland Police Association (PPA) all worked out by mid-October.

But the big reveal of that agreement—following months of talks dominated by disagreements over federally mandated police reforms—still had to wait a few more weeks. Mayor Charlie Hales brought PPA President Daryl Turner and others to city hall on November 6 for a choreographed press conference that was full of glowing rhetoric but light on details.

And yet it wasn't until the last few weeks, after some 77 percent of ballot-casting PPA members also gave their assent to the deal, that someone in city hall finally saw something nettlesome—and very expensive—lurking in an agreement that's due to be ratified by the Portland City Council on Wednesday, December 18.

City officials now acknowledge that fallout from a new provision meant to keep cops from cashing out "comp" time earned while working holidays could lead to a one-time financial hit as big as $1.5 million.

And instead of going back to the union to try to head that off, the city is now preparing to roll the dice and pay whatever the damage might be.

"Our discussion was if there was something we should do to mitigate it," says Anna Kanwit, director of the Portland Bureau of Human Resources.

But ultimately, she says, the answer was "no." It didn't make sense to reopen the agreement. And the PPA, sources say, wasn't willing to consider it.

Asked to comment both on the proposed contract and the late flutter over the potential payment, the PPA's Daryl Turner refused to return messages seeking comment. Twice when he did pick up the phone, he said he was "busy."

The problem the city uncovered, it turned out, was a subtle one.

Starting January 1, 2014, officers who decide to be paid with extra time off for working a holiday shift would no longer be able to cash out that comp time. That's the easy part.

The hard part is what happens with all the comp time cops already have stashed on the books. As of December 31, anything over 60 hours will be automatically cashed out—a measurable, budgeted cost. But the wild card, Kanwit says, is what officers do with those initial 60 hours.

Historically, she says, just 39 percent of cops have converted their holiday comp time into cash. But now that the other 61 percent know they're losing the option? It's possible they might all decide to cash in.

Or at least most. That was the oversight. Hence, the $1.5 million question.

"It's a one-time hit," Kanwit says.

That hit couldn't come at a better time for Portland. After a surplus driven both by austerity and new revenues last year, budget forecasters expect the city will have even more money to work with during the next fiscal year.

But uncertainty over holiday-time cash-outs isn't actually a new problem.

The provision was first added in the city's last contract with the PPA. It's since cost the city, on average, $1.2 million a year, Kanwit says. And because that amount can vary from year to year, based on how many officers cash out saved time, it's been difficult to budget. A budget review in 2012 actually blamed the provision for part of a huge surge in surprise police-bureau costs.

That's why city officials were keen to get rid of it when the opportunity came up.

At some point in the negotiations, Turner and his team agreed to give up the holiday cash-outs. The city, meanwhile, agreed to new perks and premiums that union leaders pushed hard when selling their members on the strength of the deal in internal documents.

The new proposed contract increases hazard pay, adds premiums for sergeants given more oversight responsibility under federal reforms, and pays cops better for working more years in the bureau or for volunteering for off-hours shifts.

Aside from some cost-of-living increases that had already been built into city forecasts before the PPA agreement was tentatively signed—and aside from that potential $1.5 million hit—the deal actually avoids adding new costs. The last PPA contract was listed as costing $17 million over its first five years ["Breaking the Bank," News, March 10, 2011].

"It's cost-neutral," Kanwit says.

Talks with the PPA are always complicated. But this round was made even more so by wrangling over changes negotiated between the city and US Department of Justice. The union says it forced some constitutional changes to proposed new use-of-force rules, but agreed to allow other reforms like a new "discipline matrix" meant to guide punishment for misconduct in the bureau.

The PPA also succeeded in fending off any attempt to reduce the window officers have before they can be compelled to testify in internal investigations following a force incident. And the city agreed to water down a provision from the last contract on random steroid testing.

City negotiators, meanwhile, managed to drop a controversial "fitness" testing premium added in the last contract that cost $583,000 a year, officials say. Officers were able to qualify merely for having their blood pressure tested.

In another coup, the city also refused to make pay raises retroactive to July 1, the beginning of the fiscal year. PPA raises, once council okays the deal, will go back to August 29—closer to the date when the city and PPA tentatively agreed on most of the contract.

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

Council didn't sign the PPA's last contract until deep into what would have been its first fiscal year. August, ironically, is when Turner agreed to start holding talks again after an impasse on whether some bargaining sessions might be public.

A spokesman confirmed Hales' sense that the new proposed contract cleared one of his most important sticking points: After this year, Dana Haynes says, "they zeroed out the revenue impact."

Haynes also said Hales could live with the surprise one-time expense this year, especially if it means getting rid of the holiday cash-outs that made budgeting such a chore over the past few years.

"It fixes a past error," Haynes says. "The mayor's not happy about it, but fixing old errors is what you do when you find them. And it beats not fixing it."