Transportation Secretary Paula Hammond said the ferry system could have faced significant cuts without the agreement.
Brett Olson, executive secretary for the Puget Sound Metal Trades Council, said the decision came down to saving jobs.
"It's not in our DNA to forgo raises. We chose to be part of the solution," said Olson, who is also with the International Brotherhood of Electrical Workers Local 46.
Gregoire and the state Legislature are trying to plug a state budget deficit that could reach $6 billion over the next two years.
The ferry system is under particular pressure. The Governor's Office said if the existing level of service continues under the same financial constraints, there will be a $3.5 billion shortfall over the next 22 years.
Washington State Ferries chief David Moseley said the ferry system "is not financially sustainable."
By renegotiating their contracts, he said, the unions have "recognized that, they've stepped up to help us take the next step, to make it financially sustainable."