Butler County’s two largest cities will soon have to figure out how to compensate for the potential loss of millions of dollars in grant money that pays for more than 20 salaried positions.

Hamilton will have to decide what it will do when its federal COPS hiring grant expires on Dec. 31, and its federal SAFER grant expires in March. Those grants equal more than $2.5 million and pay for 13 salaries.

The city will be able to absorb the six officers into its police budget, but the 2013 proposed budget calls for 18 firefighters to be laid off.

In Middletown, the SAFER and COPS grants don’t expired until August 2014 and January 2015, respectively. City Manager Judy Gilleland said the city will examine options over the next two years.

“Obviously, once these grants expire we have several choices: seek new grants, which we believe will be available; seek other funding sources, which we have not discussed at this time; or reduce expenditures accordingly,” she said. “Because we have not had any discussion about our options with City Council or employees, I cannot estimate which option we will pursue at this time.”

Roughly $6 million in federal grants — which include the departments of Justice, Homeland Security, Transportation and Housing and Urban Development — pay for more than 46 full-time equivalent positions in Hamilton and Middletown.

But the police and fire grants are the only ones that are finite, and if the funding isn’t there, those departments will have to look at other funding sources or cuts.

While Middletown can afford to wait until funding is available, Hamilton cannot.

The city is facing potential firefighter cuts of 18 by May, and the police department may have to find money to hire two more officers due to a minimum staffing requirement agreed to in the FOP contract.

Hamilton Deputy Fire Chief Mark Mercer said grants, including ones for programs, training and equipment, allows the department to function at a high level and not fully rely on local income taxes.

“With the grant funding, we’ve been able to fill a gap in losses of income in four or five areas,” Mercer said referring to the state cuts enacted by the governor’s budget.

Mercer said the department will pursue additional grants and funding sources, and will be able to reapply for the SAFER grant, which is a staffing grant. If firefighter positions are cut, the city would be rated higher in its SAFER grant application because of the need for staffing.

The city police department has reduced its staffing since 2007 by 23 officers, which is one of two reasons why it won’t see any officers laid off. The other reason is the police union contract says the department cannot go under 105 officers — and there are currently 103 on staff — so police Chief Scott Scrimizzi said they need to bring on two more.

Finding a new grant to fund any new or existing officer for 2013 won’t be easy since the chief was told by the U.S. Department of Justice there are no grants available for next year at this point. Even if a grant becomes available next year, Scrimizzi said it can’t be a matching grant “because we don’t have any funds to match.”

Middletown police Chief David VanArsdale and deputy fire chief Paul Lolli say these grants are important to the police and fire service.

“Every officer we have on the street goes to fighting crime,” he said. “If we took those positions out, that would be one less officer per shift working.”

A shift in Middletown has a minimum staffing level of seven officers, and each officer handles about 20 calls for service per shift. If the minimum staffing is reduced, those 20 calls would be divided among six officers, VanArsdale said.

At the end of 2011, five firefighters were laid off. Two of those firefighters were called back as positions opened. When the SAFER grant was accepted, two more of the laid-off firefighters were hired back. The fifth firefighter had already accepted another job elsewhere.

Bringing on those six positions via the grant made a “big difference,” Lolli said.

“It allowed us to put firefighters on the street so our staffing and resources weren’t strained,” he said. “It also helped tremendously cut down on our overtime cost because we had maintained our minimum staffing level at 16.”

Hamilton City Manager Joshua Smith said he has issues with these short-term grants, but the more fundamental problem is the way cities receive funding from the state and federal governments.

“The whole system is broken on how they come out of cities and how they come back into the cities,” Smith said of tax dollars.

Smith said if it wasn’t for the state, and the federal, government taking their cut of local dollars before local governments, they wouldn’t be as reliant on grants.

“I’m not a fan of these grants because you’re only paying for a very limited time and then it goes away,” he said.