OAKLAND -- An arbitration agreement between AC Transit and its bus drivers union will halt a planned third round of service cuts this year, the transit district and the union said Tuesday.

An arbitration panel in the contentious labor negotiation reached a decision Friday for a new three-year contract between the district and the Amalgamated Transit Union Local 192, representing 1,750 of its bus drivers and mechanics.

The binding decision calls for union members to contribute to their health and benefit plans, and includes work rule and holiday changes, AC Transit spokesman Clarence Johnson said.

Union president Claudia Hudson said members' health and benefits contributions will be 6 percent of wages in the first year of the contract, 5 percent the second year and 3 percent in the final year. Starting wages will be unchanged.

The cuts will help the district reduce a projected shortfall of about $38 million over the next three years, Johnson said.

"There are no winners or losers in this arbitration," said AC Transit Interim General Manager Mary King. "Both AC Transit and the union focused on what is best for the riders and taxpayers of this district and what is in the long-term interest of maintaining public transit for the people we serve."


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The agency had cut service by 7.8 percent in March, another 7.2 percent Oct. 31, and had planned to chop about 6 percent from weekend and night service on Dec. 16.

While the planned December cuts have been averted, King added that "in all probability, cuts will still have to be made sometime in 2011."

The financially ailing public transit system had planned next month to reduce weekend service by half and cut four of the six overnight lines to save estimated $11.1 million. More than 90 union jobs would have been cut.

"Through this process -- I already knew it was going to be painful -- but the arbitrator actually rendered a decision that (allows us), during these difficult times, to sustain provisions of our contract," Hudson said. "I'm tired of fighting. I don't have to prepare to have 90-plus people laid off and I don't have to watch the public walk."

The previous contract between the union and AC Transit expired June 30. When the district imposed a contract July 18, it was challenged in court by the union. A judge sent both sides to binding arbitration.

On Tuesday night, public transit advocates held a rally in downtown Oakland to call on East Bay leaders to seek funding that would enable AC Transit to roll back all service cuts this year.

The rally, which drew about 80 people, unveiled a coalition called the AC Transit Accountability Campaign. Advocates acknowledged the new labor agreement but said it doesn't go far enough.

They contend elected federal, state, county and city officials from the East Bay should work as hard to secure funding to avoid or undo AC Transit service cuts as those officials did to secure funding for BART's $484 million rail extension to the Oakland airport. A ceremonial groundbreaking on the rail project was held last month.

Advocates said new money sources could come from the upcoming reauthorization of the federal transportation bill, the development of Alameda County and Bay Area transportation plans, and Alameda County asking voters to reauthorize the Measure B sales tax for transportation.

Staff writers Sean Maher and Denis Cuff contributed to this story.