A $10 million, one-time federal transportation grant helped the Port Authority balance its operating budget through June 30, but Chief Executive Officer Paul P. Skoutelas says the grant won't be available next year, making the authority's financial future look bleaker than ever.

Yesterday, Skoutelas told the Port Authority board that the authority faces a projected $30 million operating deficit for fiscal year 2005, which begins on July 1.

Unless the state Legislature establishes a dedicated and growing source of funding for public transportation, Skoutelas said, the Port Authority will have to consider service reductions, fare increases and employee layoffs in 2005.

"While further administrative cuts taken by the authority and end of the year budget actions by the state Legislature enable us to plug the financial hole in the current fiscal year, the state Legislature did not deal with a comprehensive transportation funding package for public transportation," Skoutelas said.

"Public transportation cannot survive if there is no growth on the revenue side. The costs continue to rise for us."

This year's projected $20 million operating deficit was averted by three things: the state restored $4 million in operating subsidies, the authority eliminated 24 jobs, and the authority received a $10 million, one-time, special Pennsylvania Department of Transportation grant.

Skoutelas said the $10 million grant, negotiated through PennDOT, Southwestern Pennsylvania Commission and Allegheny County, won't be available in 2004-05. He said there's no growth on the revenue side, but the authority is strapped by rising fuel costs and double-digit increases in health care and pension liabilities, as well as a continued shortfall in state funding, where operating funds have remained flat for six of the past eight years.

In the last two years, the Port Authority said, it has eliminated 141 positions, 15 percent of the work force. These included 57 administrative positions.

If the $20 million deficit had not been plugged this year, the authority said, it would have had to increase base fares by $2 and reduce service by 20 percent, eliminating Sunday service and weekend service after 9 p.m.

Skoutelas said the Port Authority's budget problems are not unique. The Southeastern Pennsylvania Transit Authority in Philadelphia is projecting a $70 million budget deficit and smaller transit agencies are raising fares and reducing service.

At yesterday's board meeting, the first of 2004, Skoutelas outlined some achievements of 2003: a total of 59 park-n-rides lots offering 11,000 spaces to commuters; 225 new buses; and the completion of the extension of the Martin Luther King Jr. East Busway in Swissvale.

In other business, the Port Authority announced that it will launch Transit Watch, a public awareness and education campaign designed to make employees and the public more aware of what may constitute suspicious behavior or packages and giving them instructions and emergency preparedness tips.

Beginning immediately, information will be placed on all buses and rail vehicles, incline stations and the authority's Downtown Service Center on Smithfield Street.

The board also approved about $1 million worth of contracts for its operations, including a $126,315 contract for rock salt.

It also approved a $262,390 contract with Frank J. Zottola Construction Inc. to build a new 33-space park-n-ride lot adjacent to the Idlewood station on the West Busway and a $7,943,434 contract with Bruce & Merrilees Electric Co. to install traffic and tunnel operating controls in the Wabash Tunnel beneath Mount Washington. The tunnel is being reconstructed for use by high-occupancy vehicles and is expected to open this fall.