Allegheny County Chief Executive Dan Onorato's budget remarks may have set the stage for the most contentious labor situation at the Port Authority since 1992, when union workers staged a 28-day strike.

"If he thinks he's going to take [budget problems] out on the backs of workers, he's going to have a fight on his hands," Patrick McMahon, president and business agent for Amalgamated Transit Union Local 85, said yesterday after reading news articles in which Mr. Onorato called union benefits "outrageous."

"We don't appreciate the fact that he's holding transit funding over our heads and trying to negotiate a contract through the newspaper," Mr. McMahon said. "When the governor [Ed Rendell] was a driving force in settling our last contract, [Onorato] bragged about how fair and responsible it was. Now, all of a sudden, we didn't give back enough."

The current three-year contract expires June 30 with Local 85, whose ranks have been thinned by service cuts and early retirements to about 2,600 operators, mechanics, maintenance workers, first-level supervisors and other support personnel.

In his budget address to County Council on Tuesday, Mr. Onorato said he expected transit union members to make the same types of concessions that have been enacted for management, including a wage freeze, higher contributions for health insurance, and elimination of early retirement and retiree health insurance.

Mr. Onorato also proposed a 10 percent tax on poured drinks and a $2-a-day tax on rental cars to provide the county's share of matching money for state subsidies rather than relying on property taxes for $30 million. He said he would limit the amount of county money that the authority receives until it makes changes to reduce employee costs.

Mr. McMahon noted that members are contributing 1 percent of their wages toward health insurance premiums for the first time. The union also agreed to 5 percent contributions and different retirement rules for new employees in their current contract.

Management contributes 2 percent of wages toward health care, an amount scheduled to increase to 3 percent July 1.

Nevertheless, the number of union and nonunion retirees now outnumbers active employees. Their health care premiums will eat up about 10 percent of the current fiscal year's $332.2 million operating budget, authority Chief Executive Officer Steve Bland said.

"At this rate, if we don't get costs under control, we'll be looking at deficits again in three to five years," even with increased state and county funding, he said. "Cuts are not going to be fun or easy, but if we're hoping to have a viable transit system, they're something we're going to have to deal with. Otherwise, we're just postponing the inevitable."

Mr. Bland said the far larger, Philadelphia-based Southeastern Pennsylvania Transportation Authority pays about $8 million a year for retiree health care premiums, compared with about $30 million at the Port Authority, although SEPTA has three times as many retirees.

At SEPTA, the normal retirement age is 62, although employees can retire at 55 with 30 years of service. In November 2005, the authority raised its retirement age to 55 with 25 years of service after well more than 1,000 employees -- some in their late 40s -- had already walked out the door with full pensions and health care coverage. The normal retirement age for county employees is 62.

Mr. Bland said wages and benefits represent 75 percent of the Port Authority's budget. Although post-retirement health care coverage has been discontinued for about 275 nonunion employees, they represent only 8 percent of the total work force.

The top operator's wage -- the single biggest job classification -- is now $22.85 an hour, or $47,528 a year, as a result of a 3 percent pay hike that went into effect July 1. However, most operators gross more than $50,000 a year as a result of built-in overtime, shift differentials or other premiums.

Although Mr. Onorato sounded as if he wants union concessions sooner rather than later, Mr. Bland indicated that appears unlikely because the collective bargaining agreement remains in effect for 8¹/₂ months.

"This doesn't give us much leverage," Mr. Bland said.

Asked if he would be receptive to negotiating a new contract before the June 30 deadline, he said, "Sure, if they offer us something. But we haven't heard that."

Mr. McMahon said he expected Mr. Onorato to blame the union for the authority's continuing financial problems.

"Just [Tuesday] morning, we called his office, trying to arrange a meeting to talk about areas where we think the authority can cut costs," Mr. McMahon said. "Nobody called us back. Nobody seems in a hurry."

Mr. Onorato yesterday said he did not wish to comment publicly on contract specifics.