Mayor Nutter this afternoon said the police arbitration award would help the city conquer some long term financial problems, but noted that paying for raises will be tough.

"There is no question that the economics of the award absolutely presents a fiscal challenge in an already fiscally challenged environment," Nutter said.

Nutter put the price of the 7 percent raise, which officers will receive over the next three years, at $114 million. He said that number will be somewhat offset by savings in pension and health care costs, but said the contract will cost the city more than it saves.

On health care the union will go to a self-insured plan next summer, meaning the city will pay the medical bills instead of a per-member cost each month. Union members won't pay a payroll deduction for benefits, but will pay increased co-pays for prescription drugs and doctor visits. And on retirement, new hires will either have to pay more to enter the traditional pension plan or opt for a hybrid plan that will include a lower benefit traditional pension and a 401k plan.

Nutter said both those changes are huge, given how the city's benefit costs have ballooned in recent years.

"The short term pain is offset by the long term gain," Nutter said.

Nutter also said he was unhappy with provisions that will make it easier for officers to move outside the city, but said the city solicitor had advised him that the issue could not be appealed.

"I believe there is an immense value to having police officers live in the city in which they work," Nutter said. "I'm not pleased with this particular change."

The big question now is how this award will influence the remaining three unresolved contracts for firefighters, blue collar and white collar city workers. Nutter said he hopes to see some similar changes to the contracts for those workers.