(Photo by Eric Savage)

Metro and its largest union, ATU Local 689, are closer to a new agreement following the decision by an arbitration panel to approve a 1.6 percent average raise for union workers over the next four years.

The arbitration panel announced its binding decision Tuesday, and it was made public Wednesday by Metro and the union. The move will cost Metro $82 million.

The ruling will become the bones of a new contract between Metro and the union, which represents nearly 8,000 frontline employees. The new agreement replaces a contract that expired two years ago.

“After two years of bargaining and a year of making our best case through binding arbitration, Metro’s structural operating deficit remains completely untouched,” said Metro General Manager Paul Wiedefeld.

Metro must cap its operating costs to 3 percent growth a year under terms of a new funding agreement with Maryland, Virginia, and D.C.

In the negotiations, the transit agency succeeded in keeping costs low in some areas, but not the one it really wanted: retirement benefits.

Metro hoped to transition new employees to 401Ks to keep costs down, but the arbitration board chose not to rule on retirement benefits, which means that new employees will continue to get pensions.

The agency has a $2.8 billion unfunded pension liability.

Wiedefeld said he is disappointed that the retirement issue was not addressed, but said in a statement that he is not likely to appeal because the new contract saves money on near-term healthcare costs.

Starting in January, employee contributions to healthcare will increase from 17 to 20 percent. That figure is more in line with similar unions, and will save Metro $21 million, Wiedefeld said.

The arbitration panel also declined to rule on overtime caps. Metro says that it is the only large transit agency in the country with no overtime limit toward pension calculations.

In a statement, union leadership said, “We believe the independent arbitration panel came to a rational decision … Although under normal circumstances the totality of this decision would not be adequate, we are willing to accept the terms of this final and binding arbitration award for what we believe is in the best interest of the system.”

The statement also said that the union hopes Metro leadership will “not waste any more of the taxpayer’s money by seeking to undermine the contractual and agreed upon process for handling impasses, as specified in the WMATA Congressional Compact, by running to court.”

Wiedefeld said he wants closure so Metro workers can focus on safety and customer service.

The decision is retroactive to July 1, 2016. The first year wage increase is 0 percent, followed by a 1 percent increase last fiscal year and 2.5 percent increase this fiscal year. WMATA will pay Local 689 employees the new wages as soon as payroll changes are made this fall.

The decision included an average 2.3 percent wage increase in fiscal year 2020. Healthcare benefit changes for active employees are effective January 1, 2019.

The four-year contract goes through July 2020, but as Union President Jackie Jeter said Tuesday, “it’s almost time to negotiate our next contract.”

This story originally appeared on WAMU.