The District must grant its police union larger pay raises than those already accepted by the union representing D.C. firefighters, a three-member arbitration panel ruled yesterday in a decision that could cost the city up to $23 million.

The 65-page ruling in favor of the Fraternal Order of Police was the first salary dispute decided by binding arbitration under D.C. labor law, and it discards the longstanding principle that Washington's police and firefighters should receive the same salaries.

The 2-to-1 arbitration decision, which can be overturned only by two-thirds vote of the City Council, provides the 3,300-member police union with annual pay raises ranging from 4.5 percent to 5.5 percent over three years, compared to the 3 to 4 percent annual raises accepted by the International Association of Firefighters and other city unions.

Police will now be paid more than firefighters for the first time in roughly 60 years, according to District officials. Pay scales for police and firefighters, prior to the current contract, start at $19,850 yearly, with a $28,584 maximum after 16 years.

The decision is likely to increase pressure on Mayor Marion Barry from six other unions representing 20,000 employes who have already accepted substantially lower pay raises than those won by police. Municipal unions, which are currently negotiating with the city over working conditions, staffing and other matters, did not achieve other benefit improvements that police won in yesterday's ruling.

The head of the city's largest union, George Bispham of Council 20 of the American Federation of State, County and Municipal Employees, said yesterday he would seek a meeting with Barry because information disclosed during the police arbitration indicated the city "either lied or misled us" by telling other unions it could not afford larger raises.

Donald H. Weinberg, the city's chief labor negotiator, said, "We are quite disappointed by the result . . . . It is an expensive package." Weinberg declined further comment, saying he planned to review the decision with Barry and other city officials.

Gary Hankins, chairman of the FOP labor committee, called the ruling "a major victory for police officers" and said it showed that the custom of attempting to impose a single pay package on police and firefighters is "a dying practice."

Hankins said the union is optimistic that the City Council will agree to the arbitration ruling. Council members were not immediately available for comment, but a ranking staff member said the decision "will force the council to wrestle with a major policy question" because it would break a pattern of wage settlements accepted by other unions.

The arbitration panel, headed by George Washington University law professor Donald P. Rothschild, ruled that the union's final pay proposal of roughly 15 percent wage increases over three years was closer to the expected inflation rate than the city's offer totaling roughly 9 percent.

During police arbitration hearings, the city "disavowed" any claim that it could not afford to meet the union offer, and instead based its case largely on the argument of "parity" with firefighters, the ruling said. City officials had testified that parity was important to maintain harmonious relations between police and firefighters, and to prevent the city from being "whipsawed" by competing wage demands.

But the parity argument was rejected by the panel, which included Rothschild as a neutral party, plus one representative each from the union and the city.

"Perhaps nowhere in this country are the demands on police more complex or more important than in this nation's capital, where concepts of a free society are constantly being challenged," said the opinion by Rothschild, who was joined by Robert E. Deso, the FOP's lawyer. The city's representative, Robert W. Klotz, a retired D.C. deputy police chief, dissented.

"The duties and responsibilities of D.C. police cannot be taken for granted. It is necessary, under these circumstances, to attract, train, and maintain personnel of extraordinary sensitivity and ability in order to protect the public health, safety, and welfare," the ruling said.

The arbitrators said that the ruling was not intended to minimize the value of firefighting versus police work. "Nor is anyone indicating that one is more or less important than the other. What is being acknowledged, which is also being acknowledged on a national level, is that their organization, duties and skills are different," the ruling said. Arbitrators cited a study of 30 cities showing only six practiced police-fire parity.

Under D.C. law, in the event of a negotiating impasse, each side submits its "last best offer" to arbitrators, who then must choose one of the two packages, without compromise. The practice is meant to encourage each side to moderate its demands in hope of winning approval from the panel, appointed by the D.C. Public Employee Relations Board.

The arbitrators also stated "in the strongest possible terms" that they unanimously believed the two sides should have resolved their differences at the bargaining table, without forcing a third-party settlement.

The city estimated that the pay and benefit package awarded yesterday, which also establishes night differentials and increases medical coverage, will cost $57 million, or $23 million more than the city's final offer of $34 million. The arbitrators estimated the cost at $42 million, or $20 million more than the city's offer.

Thomas Tippett, president of the firefighters local union, said, "We are pleased that the police did well in arbitration; that helps all labor unions . . . . We are basically satisfied with our contract."