Police officers will get a raise, while the city’s budget will take a worse hit than expected, following a decision by the state Public Employment Relations Board.

The board’s decision, increasing starting salaries for police officers to $35,881 from $25,100 and providing a 9.73% retroactive raise covering two years, will cost the city $50 million a year more than it had budgeted. If other uniformed employees, including firefighters, sanitation workers, and corrections officers, seek to renegotiate their contracts and receive similar pay raises, that could cost the city an additional $135 million a year, for a total new annual shortfall of $185 million.

The pay raises come at a time when Wall Street is facing layoffs, the real estate market is sagging, and Mayor Bloomberg already has called for more than $1.3 billion in budget cuts while holding the line against spending increases.

In anticipation of the ruling, Mr. Bloomberg had warned that the board’s decision could blow “an enormous hole overnight” in the budget, threatening a 7% property tax cut. He said the tax cut might have to be eliminated to fill the void.

A spokesman for Mr. Bloomberg said yesterday that the city is still analyzing the impact of the ruling, but he said the mayor remains committed to providing continued property tax relief.

Even if Mr. Bloomberg doesn’t touch the property tax cut he has proposed, the ruling still is “a bit of a hit for the city,” the research director at the Citizens Budget Commission, Charles Brecher, said yesterday.

Mr. Bloomberg may have to make deeper cuts to city agencies to make up for the shortfall or hope that revenues come in higher than projected.

Presidents of two of the city’s four other police unions said they would consider reopening their contracts from 2006 if it appears they can get a better deal now by matching the award given to the Patrolmen’s Benevolent Association. In particular, they said they would be examining whether cuts in vacation time and other givebacks included in the new contract are too much to ask of their unions.

“We certainly have a re-opener clause that allows us to revisit that round, but before we do that we have to analyze the entire award,” the president of the Detective’s Endowment Association, Michael Palladino, said.

The president of the Sergeant’s Benevolent Association, Edward Mullins, said he was looking at the deal and planned to take it back to his members for a final decision on what to do. “To go in and duplicate what they did would create the whole avalanche effect,” he said. “To be compensated, we have to create a reduction in vacation time. The big question is the value.”

Under the new contract, all police officers will have their salaries raised by 9.73%, the mayor’s office said. The city originally offered a 6.24% raise following the pattern established in deals with other uniformed unions for the same time period.

Both Mr. Bloomberg and the president of the Patrolmen’s Benevolent Association, Patrick Lynch, praised the decision by the state board. In a statement, the mayor said the givebacks from the union — 2.81% in productivity increases — would help “preserve the City’s financial position going forward.”

The givebacks include allowing the police department to reschedule police officers to work other days without having to pay them overtime.

“This award goes a long way in addressing our concerns with the current starting salary for Police Officers,” the mayor said in a statement.

Mr. Lynch praised the deal mainly because it broke with the city’s recent pattern, calling the tradition of matching each union’s contract to that of other unions “old, out-dated and ineffective.” He denounced the loss of 10 vacation days for future hires included in the new deal, and said the raise wasn’t enough to keep the city competitive with other police departments.

At a City Council hearing yesterday, the police commissioner, Raymond Kelly, said he was looking forward to the announcement of a raise for police to help reverse the department’s recruiting crisis. He said yesterday the raise could be implemented for the next class of recruits.

He also presented a grim outlook for the department in the next year or more as the city cuts costs amid an economic slowdown.

Budget cuts will mean new lows in police officers patrolling the streets, dirtier precinct houses and older police cars. Construction of a new police academy may be delayed as the mayor has called on the department to find ways to decrease its spending, Mr. Kelly told the City Council yesterday.

“The reality is — certainly the aftermath of the sub-prime mortgage crisis — that we’re taking reductions, we’re taking hits, like any other city agency,” Mr. Kelly said.

The number of police officers has dropped to near 35,000 — down from more than 40,000 six years ago — as the department has had trouble filling its ranks to capacity.

In January, the police department had planned to hire more than 2,100, but only hired 1,217. This year, the department had planned to hire 1,200 police officers this July, although Mr. Kelly said yesterday at a City Council hearing that he expected only about 1,000 would be hired. The department plans to hire 1,400 in January 2009. It is also cutting back on the number of administrative and custodial staff.

The debate over police salaries is far from over. The police union and the city will be going straight back to the bargaining table to negotiate a contract covering the next two years that is already late. The award increases the top pay for officers to $65,382 from $59,588, before overtime, and covers the contract period from August 1, 2004 through July 31, 2006. The negotiation was thrown to the state board when the city and the Patrolmen’s Benevolent Association reached an impasse.