International Association of Machinists and Aerospace Workers, AFL-CIO, District Lodge No. 160


Intercity Transit

Interest Arbitration

Arbitrator:      Alan R. Krebs

Date Issued:   08/24/1995



Arbitrator:         Krebs; Alan R.

Case #:              11554-I-95-00247

Employer:          Intercity Transit

Union:                Machinists; Local 160

Date Issued:      08/24/1995













Date Issued:   August 24, 1995












INTERCITY TRANSIT                                                                                Bruce L. Schroeder




AFL-CIO, DISTRICT LODGE NO. 160                                                       Dennis P. London





A.        PROCEDURAL MATTERS                                                                        1

B.        APPLICABLE STATUTORY PROVISIONS                                             2

C.        ISSUES                                                                                                           4

D.        PROPOSALS BY INTERCITY TRANSIT                                     5                            

E.         PROPOSALS BY THE UNION                                                                    6

F.         BACKGROUND                                                                                           7


              OF THE EMPLOYER                                                                                 9

H.        STIPULATIONS OF THE PARTIES                                                          11

I.          COMPARABLE JURISDICTIONS                                                            11

J.         WAGE COMPARABILITY                                                             19

            1.   With Comparable Employers                                                                  19

            2.   With the Local Labor Market                                                                 20

K.        STEP COMPARABILITY                                                                            22

            1.   Step comparability with comparable employers                         23

            2.   Step comparability with local public employers                          24

L.         LEAD DIFFERENTIAL COMPARABILITY                                            24

M.       TRAINING PREMIUM COMPARABILITY                                            25

N.        ECONOMIC INDICES                                                                                25

0.         FISCAL CONSTRAINTS                                                                             26

P.         OTHER FACTORS                                                                                       28

            1.   Internal Parity                                                                                          29

            2.         Turnover                                                                                             30                                                                                                                                                                    30

Q.        EXPLANATION OF AWARD                                                                     30

R.        INTEREST ARBITRATION AWARD                                                       30
















            In accordance with RCW 41.56.492, an interest arbitration

hearing was held involving certain employees in the maintenance

department of Intercity Transit.  These employees are represented

for purposes of collective bargaining by International

Association of Machinists and Aerospace Workers, AFL-CIO,

District Lodge No. 160.  The undersigned was selected by the

parties to serve as the Arbitrator.  The parties specifically

waived the provision in RCW 41.56.450 which calls for the

establishment of a three member arbitration panel.  A hearing was

held in Olympia, Washington, on May 18, 1995.  Intercity Transit

was represented by Bruce L. Schroeder of the law firm Heller,

Ehrman, White & McAuliffe.  International Association of

Machinists and Aerospace Workers, AFL-CIO, District Lodge No. 160

was represented by Dennis P. London, Business Representative.


            At the hearing, the testimony of witnesses was taken under

oath and the parties presented documentary evidence.  A court

reporter was present, and, subsequent to the hearing, a copy of

the transcript was submitted to the Arbitrator.


            The parties agreed upon the submission of post-hearing

briefs.  The Arbitrator received the briefs on June 22 and 26,

1995.  In view of the lengthy record, the parties agreed to waive

the statutory requirement that the interest arbitration award be

issued within 30 days following the conclusion of the hearing.

Instead, it was agreed that the Arbitrator would have 60 days to

submit his award.


            While your Arbitrator has carefully reviewed and considered

all the evidence presented, given its volume it would be

impractical to detail all the information and statistics

provided.  Evidence presented has been set forth in this Opinion

to the extent deemed necessary to explain and support the Award




            In the state of Washington, where public passenger

transportation systems and their employees are unable to reach

agreement on new contract terms by means of negotiations and

mediation, RCW 41.56.492 calls for interest arbitration to

resolve their dispute.  In interest arbitration, an arbitrator or

arbitration panel adjudicates a resolution to contract issues

regarding terms and conditions of employment, which are at

impasse following collective bargaining negotiations.


            RCW 4l.56.492 sets forth certain criteria which must be

considered by the arbitration panel in deciding the controversy:


                                                * * *

In making its determination, the arbitration

panel shall be mindful of the legislative

purpose enumerated in RCW 41.56.430 and as

additional standards or guidelines to aid it

in reaching a decisions [decision], shall

take into consideration the following


      (a)        The constitutional and statutory

authority of the employer;

      (b)        Stipulations of the parties;

      (c)        Compensation package comparisons,

economic indices, fiscal constraints, and

similar factors determined by the arbitration

panel to be pertinent to the case; and

      (d)        Such other factors, not confined to

the foregoing, which are normally or

traditionally taken into consideration in the

determination of wages, hours, and conditions

of employment.


RCW 41.56.430, which is referenced in RCW 41.56.492, reads as



      Uniformed personnel--Legislative

declaration.  The intent and purpose of this

1973 amendatory act is to recognize that

there exists a public policy in the state of

Washington against strikes by uniformed

personnel as a means of settling their labor

disputes; that the uninterrupted and

dedicated service of these classes of

employees is vital to the welfare and public

safety of the state of Washington; that to

promote such dedicated and uninterrupted

public service there should exist an

effective and adequate alternative means of

settling disputes.


C.        ISSUES


            The employer's actual title is the Thurston County

Transportation Benefit Area, but it is most commonly known as

Intercity Transit.  Intercity transit is the public

transportation provider in Thurston County, Washington.  It is an

independent municipal corporation governed by a nine-member board

composed of representatives from cities within Thurston County

and the County government.  The Union represents about 32

employees in the maintenance department bargaining unit.  There

are eight classifications within the bargaining unit:  lead

mechanic, mechanic, apprentice mechanic, lead service worker,

support specialist, service worker, vehicle cleaner, and cleaner.

This bargaining unit was first certified on April 21, 1994 by the

state Public Employment Relations Commission.  Following

certification, the parties were unable to reach an agreement on a

new contract despite their efforts in negotiations and the

efforts of a mediator.  In accordance with RCW 41.56.492 and RCW

41.56.450, the executive director of the Public Employment

Relations Commission certified that the parties were at impasse

on several issues.  The issues submitted to arbitration are:


            1)         Wages


            2)         Duration of Contract


            3)         Retroactivity.


During the arbitration hearing, the parties mutually agreed that

the duration of the contract should be three years.  With the

exception of wages and retroactivity, the parties have agreed to

all contract provisions for a three-year agreement, expiring on

December 31, 1997.




            1.         General Wage Increases


            Intercity Transit proposes a 2.5 percent general wage

increase effective on the first full pay period after January 1,

1995, an increase which it has already implemented.  Effective

with the first full pay period after January 1, 1996, Intercity

Transit proposes a general wage increase equal to the percentage

general wage increase for 1996 to be negotiated with Amalgamated

Transit Union Local 1384, the Union representing about 200 of

Intercity Transit's employees, including its coach operators.

Effective with the first full pay period after January 1, 1997,

Intercity Transit proposes a general wage increase equal to the

percentage general wage increase for 1997 negotiated with ATU

Local 1384.


            2.         Progression To Top Step


            The second component of Intercity Transit's wage proposal

involves the number of steps from entry level to top step.

Effective with the first full pay period after July 1, 1995,

Intercity Transit proposes to reduce the current 13-step wage

progression to seven steps.  Effective with the first full pay

period after July 1, 1996, Intercity Transit proposes to

eliminate an additional step, resulting in a 6-step progression.

Effective with the first full pay period after July 1, 1997,

Intercity Transit proposes to eliminate an additional step,

resulting in a 5-step program.  Effective with the end of the

last full pay period before December 31, 1997, Intercity Transit

proposes to eliminate one additional step, resulting in a 4-step

progression at the end of this collective bargaining agreement.

Employees would move one step per year based solely on time in

service.  Employees present in a step slated for elimination

would move to the next highest step.  The wage differential

between steps would increase from 2.5 percent to 5 percent.


            3.   Lead Mechanic Differential

            Intercity Transit proposes no special adjustment for lead

mechanics.  They would receive the same general wage increase and

step movement described above.


            4.   Classroom Training Premium

            Intercity Transit proposes to pay 50 cents per hour above

the regular rate for actual time employees serve as instructors

in classroom training.


            5.   Intercity Transit proposes that any pay increase

awarded should be retroactive to July 1, 1995.




            1.         The Union's wage proposal was presented in the

following form:


                                    Step 1                 Step 2              Step 3             Step 4


Classifi- Probation to 1 Yr.                 Over 1 Yr.      Over 2 Yrs.     Over 3 Yrs.




 Mechanic                   $15.00             $16.00             $17.00             $18.00


 Worker                      $12.60             $13.25             $14.10             $14.95

Cleaner                       $10.00             $10.90             $11.80             $12.45


            LEADS           10% OVER JOURNEYMAN RATE




The Union also made the following proposals:


            2.  Classroom Training Premium - 10 percent


            3.  Effective January 1, 1996, a percentage wage increase

equal to that received by ATU Local 1384, but with a minimum of 2



            Effective January 1, 1997, a percentage wage increase equal

to that received by ATU Local 1384, but with a minimum of 2

percent .


            4.   Retroactivity of any pay increase to January 1, 1995.




            Intercity Transit assumed operation in 1981 in the urban

areas of Thurston County and expanded service to the rural areas

of the County in 1993.  This expanded service resulted in an

increase in the work force from 193 to over 300.1 According to

Intercity Transit's 1995 budget, it services an area of 758

square miles with a population of 184,400.  The city of Olympia,

where Intercity Transit is centered, is located approximately 30

miles from the much larger city of Tacoma and about 60 miles from

the metropolitan center of Seattle.  The state capitol of

Washington is located in the city of Olympia.  The state

government is by far the largest single employer in the County.

Intercity Transit operates a variety of public transportation

services, including fixed-route buses, shuttles connecting state

facilities, dial-a-ride vans, vanpools, and intercounty service

between Thurston and Pierce Counties.


1 The number of employees is calculated on a full-time

equivalency (FTE) basis.



            Intercity Transit obtains its funding from four principal

sources.  The two largest sources of revenue by a wide margin are

a local sales tax generated and approved by voters within

Intercity Transit's service area and a percentage of the state

motor vehicle excise tax (MVET) generated within the service

area.  Additional revenues are derived from federal and state

grants as well as passenger fares.  Funding is received from the

state for the operation of the shuttle service for state offices.


            Intercity Transit has already granted bargaining unit

employees an across-the-board wage increase of 2.5 percent

effective with the first payroll in January 1995.2   According to

Intercity Transit, this increase represents an ''advance'' on its

proposal for this contract.  During collective bargaining for

this contract, the parties agreed to some benefit improvements in

overtime, out of class pay, and vacation accrual.  The additional

cost of these improvements adds up to about 0.4 percent of the

compensation cost for the bargaining unit.  In addition,

Intercity Transit agreed to continue providing medical coverage

for employees and their dependents at no cost to the employees.


2 There is one mutually recognized ''red-circled'' employee who

did not receive a pay increase.





            This is the first standard or guideline set forth in RCW

41.56.492 for consideration by the arbitrator.  Intercity Transit

argues that it is barred by the state constitution, statute, and

case law from granting a retroactive pay increase.  The Union

responds in a cursory manner that its request for a retroactive

pay increase is within legal parameters.


            Article VIII, Section 7 prohibits a municipal corporation

from making a gift of public funds.  Language in Christie v. The

Port of Olympia, 27 Wn 2d 534, 544 (1947) indicates that a

municipal corporation cannot provide a retroactive pay increase

covering work already performed, unless before such work was

performed there was an explicit agreement that future wage

payments were not to be considered full compensation.  In this

context, in 1973, the state legislature enacted RCW 41.56.950

which would permit a retroactive pay increase in the situation

where there was a collective bargaining agreement which had



Whenever a collective bargaining agreement

between a public employer and a bargaining

representative is concluded after the

termination date of the previous collective

bargaining agreement between the same

parties, the effective date of such

collective bargaining agreement may be the

day after the termination date of the

previous collective bargaining agreement and

all benefits included in the new collective

bargaining agreement including wage increases

may accrue beginning with such effective date

as established by this section.


Then, in King County/Public Safety Employees Local 519, PD 4236

(PECB, 1992) , a hearing examiner for the Washington Public

Employment Relations Commission held that it was an unfair labor

practice for a union to insist to impasse on a retroactive pay

increase for a group of employees who had not been previously

covered by a collective bargaining agreement, where there had not'

been a prior ''Christie agreement'' stating that wage increases

from the date of that special agreement would be subject to the

results of collective bargaining.  The hearing examiner reasoned

that without such a prior agreement to use as a starting point,

the Washington Constitution, as interpreted in the Christie

decision, signified that the employer could not legally offer

retroactive pay increases to previously unrepresented employees.

This holding is particularly significant here since the

Washington Public Employment Relations Commission regulates

collective bargaining, in accordance with Chapter 41.56 RCW, for

the parties to this dispute.


            Thus, the cited cases support Intercity Transit's position

against retroactivity in the circumstances here.  In any event,

as indicated below, Intercity Transit's position on the merits of

its retroactivity proposal is sufficiently supported by the

evidence presented.




            As previously indicated, the parties have stipulated to a

three-year agreement.  Although not technically a stipulation,

they also agree upon two specific employers which should be used

for compensation comparisons with Intercity Transit.  Comparable

jurisdictions will be discussed in the next section.




            The governing statute requires that the arbitrator consider

''compensation package comparisons."  In order to make such

comparisons, the arbitrator must first decide which jurisdictions

are to be compared.


            Intercity Transit takes the position that this factor allows

consideration of both comparable employers in the public transit

industry as well as employers in the local labor market.  In

order to select comparable employers in the public transit

industry, Intercity Transit applied a band of minus 50 percent of

its service area population and plus 50 percent to develop a list

of comparables within Washington and Oregon:


                                    Service Area Population


            C-Tran (Clark County                                   269,500

            Lane Transit                                                   201,400

            Kitsap Transit                                                174,160

            Ben Franklin Transit                         128,874

            Salem Transit                                     120,000

            Rogue Valley Transit                                    117,000

            Whatcom Transit                                           105,000

            Intercity Transit                                             184,400


Intercity Transit asserts that the bulk of the agencies suggested

are on the Interstate 5 corridor outside of the exceedingly dense

central Puget Sound core.


            The Union proposes a list of five comparable transit

agencies.  It provided population figures for the counties in

which these agencies were located, rather than the service area

population.  Intercity Transit. provided the numbers for the

service area populations:


                                                Service Area Population            County Population


            Pierce County             575,730                                   648,900

            Community Transit                335,000                                   516;5003

            Kitsap Transit                        174,160                                   213,200

            Ben Franklin Transit 128,874                                   169,900

            Grays Harbor Transit              66,500                                     67,400

            Intercity Transit                     184,400                                   185,900


3           The large difference between Community Transit's county

population and service area population is explained by the

existence of a second transit authority located within the county

in the city of Everett.



The Union asserts that Pierce Transit is an appropriate

comparable employer because it has a joint service area with

Intercity Transit and also because they must compete in

recruiting maintenance employees because of their proximity.  The

Union argues that Community Transit is comparable despite being

somewhat larger, because it has been used as a comparable

employer in the past.  The Union asserts that Kitsap Transit is

comparable because it is close in size and it has been used by

Intercity Transit as a comparator in the past.  According to the

Union, Ben Franklin Transit was selected because it is common

practice to select one comparable jurisdiction located in Eastern

Washington.  The Union contends that it selected Grays Harbor

Transit because of its geographic proximity even though it is a

much smaller agency.


            Dan Snow is the executive director of the Washington State

Transit Association.  That organization represents the 24

operating transit agencies in the state.  Mr. Snow testified that

Intercity Transit's list of comparable agencies is a good one

since ''it makes sense to talk about systems that are on the I-5

corridor outside of large urban areas, but not too far outside.''

Mr. Snow testified that Pierce Transit and CommunityTransit are

not comparable to Intercity Transit since they are much larger

organizations and they have much more densely populated service

areas.  In Mr. Snow's opinion, Grays Harbor Transit is too small

to be compared particularly in view of the recent tremendous

growth experienced by Intercity Transit.  Cathy Silins is the

manager of the public transportation office within the Washington

State Department of Transportation.  Ms. Silins testified that

Pierce Transit and Community Transit are not comparable to

Intercity Transit.  She testified that those two transit systems

are considered large urban transit systems and are therefore

eligible for direct allocation of funding from the federal

government.  In contrast, Intercity Transit would be considered a

small urban transit system as are Whatcom Transit, Kitsap

Transit, and Ben Franklin Transit.


            Dennis London, a business representative for the Union,

testified that during a PERC hearing, he had heard somebody from

Intercity Transit testify that Community Transit was used as a

comparator by Intercity Transit.  Mr. London further testified.

that the Union excluded Whatcom Transit as a comparator because

that agency subcontracts its maintenance work to the city of

Bellingham and Whatcom Transit itself does not employ mechanics.

He testified that C-Tran was excluded because of its distance and

its higher population.


            Melody Johnson has been the manager of human resources for

Intercity Transit for the past ten years.  Ms. Johnson testified

that Intercity Transit has not used Community Transit as a

comparable agency, but has occasionally utilized Kitsap Transit

and Ben Franklin Transit for comparison.  Ms. Johnson testified

that Community Transit and Pierce Transit are not similar to

Intercity Transit because of their size, location, and services

they provide.


            Intercity Transit provided evidence of wages and percentage

increases paid to mechanics by all seven public employers in

Thurston County who employ mechanics.  It also provided evidence

of wage levels paid to mechanics by eight automobile dealerships

located in Thurston County, as well as average wage levels paid

to mechanics in Thurston County, as reflected in an area wage

survey published by the state Employment Security Department.


            It is important to note that Chapter 41.56 RCW lists

different interest arbitration standards for transit employees

than it does for uniformed personnel.  Since 1973, police and

fire uniformed personnel have been subject to interest

arbitration.  In such proceedings, RCW 41.56.465 and its

predecessor RCW 41.56.460, call for compensation comparisons

between like personnel of like employers on the west coast of the

United States.  When RCW 41.56.492 was enacted in 1993 for

transit employees, the legislature chose to apply much of the

legislation already enacted for uniformed personnel, but it made

some changes with regard to the standards or guidelines which the

interest arbitrator must consider.  One of those differences is

that in interest arbitrations involving transit employees, the

arbitration panel is called upon to consider ''compensation

package comparisons . . . and similar factors determined by the

arbitration panel to be pertinent       This is certainly a

less specific standard than that applied to uniformed personnel

The effect of this is to permit a wider range of discretion in

the arbitration panel in selecting appropriate comparators.


            In order to determine the prevailing practice, interest

arbitrators will generally try to find the most relevant

comparisons, comparisons that the parties themselves would be

likely to consider during their collective bargaining

negotiations.  Thus, comparisons with similar types of employers

would be more relevant than comparisons with very different types

of employers.  Comparisons with other employers which are

geographically proximate would be more relevant than comparisons

with distant employers.


            Here, the parties agreed upon two transit agencies which

they believe are comparable.  Those two, Ben Franklin Transit and

Kitsap Transit, will be adopted here.  Of the remaining transit

agencies which the parties proposed and for which they provided

comparability data, I have selected the following three as

appropriate for comparison with Intercity Transit:  C-Tran, Lane

Transit, and Salem Transit.  Each of these transit agencies fall

within a population band of 50 percent over or under the

population of Intercity Transit.  They, like Intercity Transit,

are also on the I-5 corridor and reasonably close to larger urban

centers.  Salem Transit, like the employer here, is headquartered

in a small city which serves as the state capitol.  While it

would be desirable to have a few more comparable jurisdictions,

for the reasons described below, I am not convinced that the

other transit agencies suggested by the parties are appropriate

for consideration.


            Intercity Transit is three times as large as Grays Harbor

Transit.  Grays Harbor Transit is neither adjacent to Thurston

County, nor is it on the I-5 corridor.  There is just no

reasonable basis for considering Grays Harbor Transit while

ignoring other transit agencies which are closer in size or

location to Intercity Transit.  Pierce Transit and Community

Transit operate in much more populated urban regions than does

Intercity Transit.  There is insufficient evidence that Community

Transit has previously been relied upon as a comparable

jurisdiction to Intercity Transit.  Whatcom Transit cannot be

used as a comparable agency because the undisputed testimony

indicates  agency does not employ mechanics, but rather

has subcontracted its maintenance functions to the city of

Bellingham.  Rogue Valley Transit is not comparable based on a

combination of factors, including its substantially smaller size,

its distant out-of-state location in southern Oregon, about 400

miles away, and its isolation from any significant urban centers.

Moreover, inclusion of Whatcom Transit and Rogue Valley Transit

would lead to an imbalance among the comparators, in that a large

majority would be smaller than Intercity Transit.  Thus, the

principal comparable jurisdictions that will be utilized to

compare compensation levels with Intercity Transit are:



            Lane Transit

            Kitsap Transit

            Ben Franklin Transit

            Salem Transit


            Consideration shall also be given to evidence presented

regarding compensation comparisons to public and private sector

employers in Thurston County who employ maintenance employees and

mechanics.  Compensation paid for similar types of work by

employers in the local labor market falls within the statutory

standard of ''compensation factor comparisons . . . and similar

factors.''  Certainly, if wages paid for mechanics by Intercity

Transit were considerably below the local prevailing wage for

mechanics, this would likely be a concern addressed by both

parties during collective bargaining..  As observed by Elkouri and

Elkouri, in How Arbitration Works, 4th Ed. (BNA, 1985) at page

808, ''Employees are sure to compare their lot with that of other

employees doing similar work in the area.''  However, it is

certainly the case that compensation paid for similar work by

similar employers, in similar locations, such as the five

comparable jurisdictions listed above, is the most significant

comparison.  Indeed, the parties appear to recognize this since

they introduced into evidence the labor agreements for the relied

upon public transit agencies, but provided no such supporting

documentation for local labor market employers.




            1.)  With Comparable Employers


            Below are reflected the 1995 hourly wages for representative

classifications paid by the selected comparable jurisdictions and

for Intercity Transit, with the 2.5 percent increase already

provided by Intercity Transit factored in:



      Kitsap Transit                      $18.264

      C-Tran                                    16.23

      Ben Franklin Transit 16.14

      Salem Transit             14.76

      Lane Transit                           14.69

      Average                                $16.02


      Intercity Transit                   $17.57

      Relation to average               +8.8%


            Support Specialist

            Kitsap Transit                      $14.75

            Lane Transit                           14.39

            Salem Transit             12.71

            C-Tran                                    12.19

            Ben Franklin Transit 11.78

            Average                                $13.16


            Intercity Transit                   $14.38

            Relation to average               +8.5%


            Vehicle Cleaner

            Lane Transit                         $12.98

            Kitsap Transit                        12.30


4 The Kitsap Transit contract provides for up to 4 percent in

group merit pay, depending on whether certain department and

agency goals are met.  This has not been factored into the

compensation level since it would be entirely speculative based

on the record presented here, as to whether the employees would

receive any group merit pay.



            C-Tran                                    10 07

            Ben Franklin Transit               8.90

            Salem Transit             No Position Match

            Average                                $11.06


            Intercity Transit                   $11.42              

            Relation to average              +3.15%


2.)  With the Local Labor Market


                        Mechanic Wages


            Public Employers                   1995 Wages

            City of Lacey                        $19.00

            City of Olympia                      17.51

            City of Tumwater                   17.29

            Thurston County                    17.05

            State of Washington              16.94

            North Thurston School

              District                                  13.96

            Average                                $16.95


            Intercity Transit                   $17.57

            Relation to average               +3.5%


            Private Employers5                1995 Wages

            Capitol Coachman, Mazda$17.50

            Capitol Chevrolet/

              Capitol Mazda                      16.00

            Hanson Volkswagen              15.90

            Boone Ford                             15.50

            Hulbert Pontiac-Cadillac       15.00

            Evergreen Hyundai                15.00

            Rotter's Olds, Buick, GMC  15.00

            Lincoln-Mercury of

              Olympia                                14.63

            Average                                  15.56


            Intercity Transit                   $17.57

            Relation to average             +11.4%


5 Intercity Transit also submitted evidence of an area wage

survey.  That survey reflects that auto mechanics in Thurston

County were paid a mean wage of $14.41 in February 1992.  The

wage rates listed here are more significant since they are

current and specific.



            Mr. London testified that there is a distinction between the

work done by mechanics at auto dealerships, such as those listed

above, and the work done at Intercity Transit.  He testified that

auto dealerships do not work on wheelchair lifts and some other

specialized equipment contained on transit equipment.  In Mr.

London's opinion, if non-transit comparators are utilized, they

should involve ''the heavy end of the industry'' where wages are

higher.  No evidence was presented regarding this segment of the

work force.  Ms. Johnson testified that some of Intercity Transit

mechanics had previously worked at some of these auto

dealerships.  She also noted that health benefits paid by

Intercity Transit are, on average, more generous than those

provided by the auto dealerships.


            For the reasons already discussed, I find that evidence of

the prevailing wages in the local market is significant, though

to a lesser extent than are comparisons with comparable transit

agencies.  In the local labor market, I find public employers to

be somewhat more significant for comparisons with Intercity

Transit than are private employers since they are likely to have

more in common regarding organizational structure, mission, and

resources.  The wage rates presented above are the best evidence

of prevailing local wage rates which was presented at the

hearing.  I find that they do have relevance.




            The current wage scale includes a wage progression of 13

steps for each classification.  There is a 2 1/2 percent

difference in pay between steps.  Employees may either be denied

a step increase, or receive a one or two step increase depending

on performance.  Such step increases have been provided each year

in July.


            Intercity Transit's proposal would eliminate the even

numbered steps, effective with the first full pay period after

July 1, 1995, thereby reducing the number of steps from 13 to 7.

By eliminating every other step, there would be a 5 percent

difference between steps, rather than the current 2.1/2 percent

difference.  Movement to the next step would occur each year in

July as has occurred in the past, but would no longer be

dependent upon performance.  The number of steps would be further

reduced by eliminating the bottom step effective with the first

full pay period after July 1, 1996 to reduce the number.of steps

to 6, again eliminating the new bottom step in like manner in

July 1997 to reduce.the number of steps to 5, and then doing the

same at the end of the last full pay period of 1997, leaving 4

steps at the expiration of the contract.


            The Union would change the step structure effective January

1, 1995, creating a new step 1 which employees would receive

during their first year of employment with Intercity Transit.

Employees with between one and two years of employment would

automatically be placed at a new step 2.  Employees with between

two and three years of employment would automatically be placed

at a new step 3.  With three or more years with Intercity

Transit, employees would be placed at step 4, which would be the

top rate for the classification.  Movement between steps would

occur on the employee's anniversary date with Intercity Transit,

though no step movement would occur after employees top out on

their third anniversary.  The Union would also combine the

support specialist and service worker classifications and also

the vehicle cleaner and cleaner classifications.  The Union

provided no evidence in support of these classification mergers.


                        1.)  Step comparability with comparable employers


                        Employer                        # of steps           # of years6.


                        Kitsap Transit                        1                  At Entry

                        Ben Franklin Transit 5                      3.5

                        Lane Transit                           6                      4

                        C-Tran                                    5                      4.5

                        Salem Transit             6                      4.5

                        Average                                  4.67                  3.18


                        Intercity Transit -

                        Current                                   13                    @ 129

                        Intercity Transit

                        Proposal                                  13>4                @12>4

                        Union Proposal                         4                       3


6 "# of Years'' reflects the number of years that it takes to

progress from the bottom step to the top step.


7 The average of the four comparable jurisdictions that have

steps is 5.5 steps in 4.1 years.


8See footnote 5.


9 Variable depending upon performance.



            2.)  Step comparability with local public employers


Employer                                            # of Steps                    # of Years

North Thurston

      School District                              1                                  At Entry

City of Olympia                                  5                                  4

State of Washington                        11                                  4.5

City of Tumwater                               5                                  5

Thurston County                              10                                  9

City of Lacey                                    11                                  10

Average                                              7.210                   5.411


Intercity Transit

Current                                               13                             @12

Intercity Transit

Proposal                                              13>4                         @12>4

Union Proposal                                     4                                    3





            Employer                                Lead Differential

            C-Tran                                                5.0%

            Lane Transit                                       4.9%

            Salem Transit                         4.9%

            Kitsap Transit                                    3.9%

            Ben Franklin Transit             3.1%

            Average                                              4.36%


            Intercity Transit Proposal

            and Current                                        6.6%


            Union Proposal                                   10% premium



            The Union argues in its brief that Intercity Transit

''failed to focus on the fact that the leads [at Intercity

Transit] function at a supervisory level with responsibilities

far exceeding those of the majority of the other comparators.''

No evidence presented at the hearing supports this contention.


10 The average of the five jurisdictions that have steps is 8.4

steps in 6.5 years.


11 See footnote 10.



Moreover, Sharon Skeels, Intercity Transit's director of

administration, testified that she requested job descriptions

from the comparable agencies and made sure that the duties of the

compared positions did match the work performed by Intercity

Transit employees.  She used the position of lead mechanic as an

example where this was done.




                                                                  Training Premium

Salem Transit                         $0.50 per hour

Ben Franklin Transit                               0

Kitsap Transit                                                0

Lane Transit                                                   0

Salem Transit                                           0


Intercity Transit - Current                             0

Intercity Transit Proposal                 $0.50 per hour

Union Proposal                                   10% premium


The parties agree that the training premium would apply where the

employee is required to instruct other employees in a classroom-

type setting.




            The statute requires a consideration of ''economic

indices.''  The most common of the economic indices relied upon

by interest arbitrators are those published by the U.S.

Department of Labor relating to changes in the cost of living.

Reflected below is the change in the cost of living for calendar

year 1994, according to several of the leading indices:


CPI - W (All U.S. Cities)        2.7%

CPI - U (All U.S. Cities)         2.7%

CPI - U (Seattle-Tacoma)      3.4%

CPI - W (Seattle-Tacoma)     3.6%


            Intercity Transit points out that bargaining unit members

are insulated from increases in medical costs by receiving

employer paid health benefits.  Intercity Transit, relying upon

several published articles, questioned whether published CPI

figures actually overstates the true level of inflation.

Intercity Transit submitted figures which indicate that the top

step wages for mechanics have kept up with published cost of

living increases during the past ten years, and that over this

period, vehicle cleaners have received pay increases

substantially above the published rise in the cost of living.




            This standard requires a consideration of Intercity

Transit's financial circumstances, i.e., its ability to pay

additional costs associated with a new labor agreement.  Inherent

in this factor is the fact that public transit agencies in

Washington are limited in their funding sources.


            Intercity Transit's 1995 budget documents reflect a

projected increase of only 1.7 percent over 1994 revenues.  Sale

tax revenues are expected to grow only slightly.  The projected

slow growth is not surprising inasmuch as the state government,

which is the predominant employer in the county, provided no

general wage increase in either 1994 or 1995, and some of the

other local public employers, such as the county government,

followed suit.  Projected higher expenses are expected to reduce

cash and reserves by the end of 1995 to less than half of what

they were at the beginning of the year.  Randy Riness, Intercity

Transit's director of development, testified that with its

operating reserves dwindling and soon to be nonexistent, the

agency has recently undergone some modest service reductions, and

he expects that more service reductions are coming.  Moreover,

current levels of funding from the state and federal government

are in jeopardy.  Ms. Sums testified that in recent years,

there has been a significant deterioration in the funding of

public transportation agencies.  She testified that in 1990, the

maximum motor vehicle excise tax devoted to transit was reduced

from 1 percent to .815 percent.  Then two years ago it was

further reduced to .725 percent.  Ms. Silins testified that

further reductions in this revenue source are being considered by

the legislature.  Mr. Snow testified that the legislature has

diverted $12 million from the transit account to road

construction.  Mr. Snow testified that there are active efforts

in the legislature to divert even more funds from transit to

roads.  Mr. Snow testified that current levels of federal funding

are also threatened.  He testified that the House Budget

Resolution would cut funding for transit by more than 40 percent.

He further testified that in the current political climate, there

is no hope of obtaining additional funds for transit by raising

the local sales tax.


            I find based on the dwindling reserves and the small

increase in revenues over the past year, that Intercity Transit

currently can afford to finance only a modest increase in wages

and benefits.  Given the evidence that its funding sources are

seriously threatened by legislative and congressional cuts in

support, Intercity Transit is legitimately apprehensive

concerning its ability to finance substantial wage and benefit

increases in the near future.  On the other hand, the prediction

of slow growth in the local economy is suggestive of a small

growth in revenues, if it turns out that transit funding is not

significantly negatively impacted by legislative and

congressional action.  In sum, it appears that there exists

considerable uncertainty regarding the level of revenues over the

next few years, more so than would be usual.




            RCW 41.56.492 requires a consideration of "such other

factors . . . which are normally or traditionally taken into

consideration in the determination of wages, hours and conditions

of employment.''  Such factors, which are discussed below, have

been considered, but with lesser weight than that which is given

to the specifically enumerated criterion of comparability,

economic indices, and fiscal constraints.


            1.)  Internal Parity


            From the standpoint of both Intercity Transit and the Union,

the settlement reached by Intercity Transit with its other

bargaining unit and the wage increases provided to nonrepresented

employees are significant.  There is often an understandable

desire by employers to achieve consistency in its dealings with

employee groups.  Unions want to do at least as well for their

memberships as other unions and employee groups have done.  At

the bargaining table, the settlements reached by the employer

with other unions, and wage increases granted to other groups of

employees are likely to be brought up by one side or the other.

The significance of internal parity is evident here inasmuch as

the parties have already agreed to tie wage increases for the

second and third years of the agreement with the increase to be

negotiated with Intercity Transit's other bargaining unit.  Thus,

internal parity is a factor which should be considered.


            For 1995, Intercity Transit's ATU bargaining unit received a

2.5 percent pay increase.  Non-represented employees received

wage increases ranging from 1.6 percent to 2.5 percent.

Maintenance employees received the same percentage wage increase

as ATU bargaining unit members in 1993 and 1994.  Percentage wage

increases paid to maintenance employees exceeded those received

by ATU members in each of the years 1990 through 1992.  The ATU

contract provides for a wage progression of a probationary rate

and six steps.  There is 7 percent difference in wages between

steps in that contract.


            2 . )  Turnover


            Turnover and ability to attract qualified applicants are

significant indicators of whether existing compensation levels

are adequate.  Here, there has been a low turnover rate.

Excluding retirements and transfers, there has been either no

resignations or one resignation each year since 1990.  In its

last recruitment for vehicle cleaner, Intercity Transit had 224

applications for one opening.  There were 34 applications for two

mechanic positions.  These statistics indicate that the

compensation package paid by Intercity Transit is sufficient to

attract and retain employees.




            Balancing the various factors, your Arbitrator shall award a

wage increase of 2 1/2 percent for all classifications, effective

with the first full pay period after January 1, 1995, with

improved step movement according to Intercity Transit's proposed

timetable.  Such a percentage wage increase, considered in

conjunction with the improved benefits and continued full funding

of medical benefits, is consistent with the increase in the cost

of living and with the wage increases received by other Intercity

Transit employees.  With this wage increase, bargaining unit

employees would continue to receive higher wages than the average

of comparable transit agencies.  The wage level would also be

favorable when viewed in the context of the local labor market.

The cost of the Union proposal estimated by Union Business Agent

London based on information provided to him was about 22 percent.

The unrebutted evidence provided by Intercity Transit was that

the Union's proposal would result in immediate increases for 23

of the 32 bargaining unit members ranging from 10 percent to 46.7

percent.  Such an increase is excessive and is unsupportable

based on any of the statutory standards.  It is particularly

inconsistent with the reality of a local tax base depressed by

the dominant local employer having provided no general wage

increase during the past two years.  Intercity Transit's proposal

for 1995 regarding wages and step movement, which has been

adopted, would result in wage increases of 7.6 percent to 10.5

percent for 22 of the 32 bargaining unit members.  Five employees

who are already at the top step would receive the minimum 2 1/2

percent increase, four would receive between 3.8 percent and 5.1

percent and one employee would continue to be red-circled.  These

increases appear to be reasonable, particularly in view of the

limited increase in revenue.  The evidence presented neither

supports the Union's demand for a 10 percent differential for

lead employees, nor its demand for a 10 percent training premium.

None of the selected comparable jurisdictions provide for

premiums of that size.  Intercity Transit's proposal for a 50-

cent-per-hour training premium shall be adopted.  That rate

corresponds with the highest training premium offered by any of

the comparable transit agencies.  Intercity Transit's proposal to

reduce the number of steps from 13 to 4 over the life of the

contract is reasonable.  By the end of the contract term, the

step structure would be in line with most of the comparable

agencies.  The gradual implementation of the new step structure

during the contract term appears to be a significant additional

expense for Intercity Transit.  Such gradual implementation would

avoid the excessive immediate costs which would be caused by

immediately reducing the number of steps to four as the Union

proposes.  For the second and third year of the contract term, I

shall order a percentage increase consistent with the increase to

be negotiated with the ATU bargaining unit.  The parties are in

agreement as to this.  Their disagreement is over whether there

should be any minimum increase, with the Union requesting a 2

percent minimum and Intercity Transit opposing any minimum. . I

find that a 1.5 percent minimum wage increase in 1996 and 1997 is

appropriate.  The Union relies on the minimum 2 percent increase

in the current ATU contract.  The ATU contract was not submitted

into evidence and there was no evidence presented regarding how

the ''2 percent minimum'' language reads in the ATU agreement.

In any event, it appears that Intercity Transit's future revenues

are more threatened now than they have been before.  The 1.5

percent minimum appears to be a reasonable balance between

protecting the employees from an unexpectedly low increase

negotiated by the ATU bargaining unit and Intercity Transit's

reasonable apprehension of disappointing revenues.  Minimum

increases of 1.5 percent during 1996 and 1997 takes into

consideration applicable economic indices such as the CPI, as

well as fiscal constraints, and comparability, particularly since

the actual increases may very well be higher inasmuch as they are

tied to the increases to be negotiated by Intercity Transit with

the numerically predominant ATU bargaining unit.




            It is the determination of your Arbitrator, in accordance

with the findings set forth in the attached Opinion, that the

1995-97 Collective Bargaining Agreement between Intercity Transit

and International Association of Machinists and Aerospace

Workers, AFL-CIO, District Lodge No. 160 shall be consistent with

the following:


            I.          Effective on the first full pay period after January 1,

                        1995, the rates of pay for all classifications shall be

                        increased by 2 1/2 percent.


Effective January 1, 1996, the rates of pay for all

classifications shall increase by a percentage equal to the

general wage increase for 1996 negotiated with Amalgamated

Transit union Local 1384, but in any event shall increase no

less that 1.5 percent.


                        Effective January 1, 1997, the rates of pay for all

                        classifications shall increase by a percentage equal to the

                        general wage increase for 1997 negotiated with Amalgamated

                        Transit union Local 1384, but in any event shall increase no

                        less that 1.5 percent.


            II.        Effective with the first full pay period after July 1, 1995,

                        Intercity Transit shall reduce the current 13 step wage

                        progression to 7 steps with a 5 percent differential between

                        steps, in accordance with its wage proposal as contained in

                        Employer Exhibit 1.5 submitted during the interest

                        arbitration proceeding.


                        Effective with the first full pay period after July 1, 1996,

                        Intercity Transit shall eliminate the bottom step, resulting

                        in a 6 step progression.


                        Effective with the first full pay period after July 1, 1997,

                        Intercity Transit shall eliminate the bottom step, resulting

                        in a 5 step progression.


                        Effective with the end of the last full pay period before

                        December 31, 1997, Intercity Transit shall eliminate the

                        bottom step, resulting in a 4 step progression.

                        Employees shall move one step per year in July as they have

                        in the past, but such step movement shall be based solely on

                        time in service.


                        Employees who are in a step slated for elimination shall

                        move to the next higher step.


            III.       A classroom training premium of 50 cents per hour above the

                        regular rate shall be paid for actual time employees serve

                        as instructors in classroom training.


            IV.       There shall be no special adjustment for lead employees over

                        and above the existing premium.  They shall receive the same

                        general wage increase and step movement as described above.


Redmond , Washington


Dated:  August 24, 1995        S/ALAN P. KREBS

                                                Alan R. Krebs, Arbitrator