The binding decision essentially requires union members to contribute to their health and retirement plans. The decision also require changes to work rules. Overall it would cut AC Transit deficit by $38 millions over three years.
Given the declining state and local revenues, AC Transit sought savings from the new labor contract. After an unsuccessful effort to reach an agreement with the union, AC Transit board voted to impose the contract. The union fought back by bring the issue to court. The court agreed with the union by striking down the new contract. Meanwhile the drivers informally staged a sickout, which caused missed runs and more crowded buses.
If AC Transit were not able to realize labor savings, AC Transit would have to further reduce service to cut costs. After two major service cuts earlier this year, AC Transit was planning another cut in December, which would cut most overnight and weekend service. After this decision, AC Transit cancelled the December cuts but warned that additional cuts may be required sometime next year.
In this economy, it is counter-productive for transit unions refusing to make concessions to protect service and jobs. In San Francisco, where Muni drivers' pay was set by the city charter to be the second highest in the country (which essentially meant automatic pay raises regardless of the economy), city voter overwhelmingly approved a ballot measure last week to remove the wage provision from the city charter. Earlier in the year, Muni drivers twice voted down proposals to increase employee health and retirement contributions while maintaining charter mandated pay raises.