Union members rejected the agreement, which had been signed by union representatives and SFMTA management, by a vote of 944 to 488. Union leadership had made a yes-vote recommendation.
The agreement comes after three months of bargaining between the SFMTA and Transport Workers Union Local 250-A, and would have saved the agency a minimum of $38 million in labor costs over the course of the three-year contract, according to the SFMTA.
"From the beginning, SFMTA focused on negotiating a contract that would permit management to run a safe, efficient and reliable transit operation," SFMTA Board of Directors Chair Tom Nolan said in a statement tonight.
In accordance with Proposition G -- passed by city voters last November -- an arbitrator is now responsible for the contract and will have to decide between each side's final offers on outstanding issues.
The arbitrator's decision is final and binding, and the SFMTA said that it expects a decision before Tuesday, the latest date the proposed contract could be submitted in compliance with sunshine laws.
The new contract will take effect on July 1, the beginning of the fiscal year.
Among the provisions in the rejected proposal were a pay freeze for operators, the ability for the agency to hire about 200 part-time workers, and several changes to work rules, including overtime and discipline procedures, according to the SFMTA.
The union represents the roughly 2,200 operators of Muni's buses and light-rail vehicles.
Debra Johnson, SFMTA's lead negotiator and director of administration, said that the agency aims to achieve a contract that will make Muni more efficient in years to come.
"Ultimately, we believe an arbitrator will preserve most of what we negotiated at the bargaining table," Johnson said.