POULSBO — An arbitrator will decide the outcome of a contract negotiation between the City of Poulsbo and the Poulsbo Police Officers Association after the two entities failed to settle on wage and benefit terms in discussions that stretched nearly two years.

Representatives from the city and the police association gathered with their attorneys in a two-day hearing last week to deliver statements to an arbitrator provided by the Public Employment Relations Commission. A decision is expected within two months, city human resources manager Deanna Kingery said.

“I am very optimistic that we can get to a fair place,” said Poulsbo Mayor Becky Erickson, who led a restructuring of the city’s workforce last year. Staff positions were cut by about 10 percent to help balance the budget, and all employees other than police officers agreed to a 1 percent wage raise for 2011.

The city offered a 1.7 percent wage increase for patrol officers and a 4.7 percent wage increase for sergeants last year, but the association was unhappy with a 3 percent decrease in benefits that members said would have negated their bumps in pay.

“It’s a tough time to fight for your wages, but we couldn’t go backwards,” association President Dan LaFrance said.

The city’s budget constraints kept the city and association from finding a middle ground.

“The city could not accept their position. We just couldn’t. It was too expensive,” Erickson said.

The terms of the contract will be applied to this year and last year, meaning officers could receive some backpay for 2010.

Because the arbitrator’s decision is binding, LaFrance said both parties release control of the outcome, which is difficult to predict. He and other officers will be glad to have the process behind them.

“We’re excited for the decision in the sense that no matter what, good or bad, we put on a good case,” LaFrance said.

The city last went to arbitration over a police association contract in 2002. Negotiations began mid-2000, and a contract was signed in October 2002. In that case, a decision wasn’t delivered by the arbitrator for six months, LaFrance said.

“It’s always an unfortunate resolution when it comes to this, that we couldn’t come to a meeting of the minds during negotiations,” Kingery said. “That’s OK, that’s why we have the process we have.”

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

The final cost of the arbitration hasn’t been determined, Kingery said.