MILFORD — The police union and the city have agreed to extend negotiations on a new multi-year contract — a move that officials say signals a new level of cooperation and may avert a showdown before a binding arbitration panel.

Police Union President Jeff Matchett said Friday that both sides are not far apart on the issue of wages and benefits and a deal will likely be reached voluntarily.

"We are still negotiating," Matchett said. "We are scheduling another meeting. We are hopeful that it will keep moving forward in a positive manner."

Last week, city and union negotiators filed legal papers with the state that temporarily waive their right to have a state arbitrator decide the contract. Since the union's contract has expired, the union could have gone straight to the state arbitration panel.

City Attorney Marilyn Lipton and Mayor James L. Richetelli Jr. were unavailable for comment Friday.

Alderman Phil Vetro, D-4 and the board's minority leader, is optimistic that the contract will be decided soon without conflict.

"I don't think there is going to be an issue. I think they have reached a situation where they are satisfied with what they have and they will go along with what the Fire Department and the Board of Education have done," Vetro said.

The city's firefighters union agreed to a new contract with the city this spring that included annual raises of 2.5 percent for each of the contract's four years. Firefighters' benefits package stayed the same. Several other city unions reached contract agreements this year with similar provisions. Three years ago, after the police union's previous contract expired, both parties got caught up in a heated public battle over compensation.

Union leaders led public rallies outside City Hall in which governing officials were accused of turning a blind eye to police families who struggle financially. Off-duty officers participating in the rallies wore shirts stating, "Crime Doesn't Pay, Neither Does the City of Milford."

A three-member arbitration panel later decided the contract in favor of the city, particularly in terms of benefits.

Republican Town Committee Chairman Jack Fowler hopes the calm demeanor of contract talks is a portent that a peaceful resolution can be reached. "I hope it does not come to what happened then. I don't think it helped a bit," he said. Matchett expects the current pace of negotiations will continue.

"We are not held up on anything. We have reviewed each other's proposals," he said. "We don't want to go to arbitration if we don't have to."

Greg Shulas, who covers Milford, can be reached at 878-2130.