This story has been corrected. See below.

City firefighters will see their base pay rise by about 18 percent through the next three years under a wage package that will cost taxpayers an estimated $88 million more under a binding award issued by a state arbitrator last month.

Mayor Kirk Caldwell said the award won’t have a significant effect on the current year’s $2 billion operating budget. But it will require budget officials to search for about $20 million more in the new budget year that begins July 1 when the city was already anticipating a $156 million shortfall.

Last week’s news that the assessed values of Oahu properties are up 8.8 percent means there will be an increase in property tax revenues that will help narrow the shortfall, Caldwell said, although city officials are reluctant to provide specific numbers, citing pending appeals. The administration has introduced several revenue-generating measures, most recently an already heatedly debated plan to allow advertising on the sides of city buses in order to raise up to $8 million annually.

But adding $20 million to next year’s budget "means we’ve got to find more revenues somewhere else to help cover that $20 million, or we cut services, so it makes our job more challenging but not impossible," Caldwell said.

The Hawaii Fire Fighters Association contract applies to 2,000 firefighters employed by all four counties as well as state airports, but different numbers show up for each branch, said union President Bobby Lee. The Honolulu Fire Department employed 979 unionized firefighters on Nov. 1. The dollar figures provided by the city also include 23 managers who, by law, automatically see their pay and benefits change based on how their union colleagues are compensated.

Firefighters have been without a contract since July 2011 and theirs is the last of the major public employee unions in Hawaii to reach a deal. The new contract runs through June 30, 2017.

Caldwell said the increases the arbitrator awarded firefighters are about what city officials had anticipated. That’s unlike the situation with the State of Hawaii Organization of Police Officers that caught them off-guard.

That four-year contract not only gave officers a 4 percent raise each year, but also a steep increase in what’s known as a standard of conduct differential that cost taxpayers about 36 percent more than originally anticipated.

Specifically, firefighters will receive:

» 2 percent raises every six months retroactive to July 1 through July 1, 2016, and then a 5 percent increase on July 1, 2016. The raises will cost the city about $3.6 million more this year, but $25.9 million annually by the end of the contract, according to the city.

» Reinstatement of a "rank-for-rank recall" provision, beginning July 1, that requires higher-level firefighters, about 40 percent of the Honolulu force, to be offered a minimum of 12 overtime shifts each year. By 2017, the provision may cost the city about $10 million annually.

» Catch-up and service "step" increases. Steps are tiers of pay based on years of service within a specified job description. Employees typically move up steps on their hiring anniversary dates.

Additionally, the city will need to pay $5.9 million more this year and $6.2 million more next year as its share contribution into the state health benefit trust fund.

Lee said firefighters had previously been given a rank-for-rank recall provision but that the union voluntarily suspended it in 2010 to help the state and counties during a tight budgetary period.

Other non-emergency government employees at the time were furloughed.

The provision allows for a more equitable distribution of overtime opportunities, Lee said.

Robin Chun-Carmichael, Labor Relations Division chief for the city Department of Human Resources, said that while the firefighters association did voluntarily give up the provision, it was initially instituted only as a pilot program.

Both Lee and human resources officials said details of the provision have yet to be completed, so the definite cost is difficult to pin down.

A first-level Honolulu firefighter who has just made it past recruit status now makes an annual base salary of $48,324. Adding up the raises and factoring in a compound effect, the Honolulu Star-Advertiser calculates a firefighter in the same position and with the same seniority status would make $57,141.70 at the end of the contract, or about 18.2 percent more, not including fringe benefits.

Lee said contract talks took more time than those of other unions largely because his group wanted to see major changes to the language for many non-cost issues. Those changes are expected to result in fewer grievances filed by the union, he said.

"We were pleased with the outcome," he said.

CORRECTION: A first-level Honolulu firefighter who has just made it past recruit status now makes an annual base salary of $48,324, not including fringe benefits. An earlier version of this article said a "beginning" firefighter currently makes a base salary of $61,000.