A state-appointed fact-finder has recommended 3 percent annual wage increases for bus and trolley operators at the Port Authority but also proposed changes in health care coverage that would cut costs and discourage early retirements.

Former Dickinson School of Law Professor Jane Rigler, the neutral third party for the Pennsylvania Labor Relations Board, released her report yesterday afternoon, the deadline under the state-mandated 45-day fact-finding process.

Copies went to the negotiating teams for the Port Authority and Local 85, Amalgamated Transit Union, which represents about 2,300 hourly workers and first-level supervisors whose contracts have expired.

Both sides have 15 days to accept or reject the report in its entirety. If either side rejects, Local 85 will have a legal right to strike and further negotiations are to resume before mediators.

Whether the recommendations satisfy the expense containment measures and concessions sought by management and Allegheny County Chief Executive Dan Onorato will not be known until next week because cost impacts must be analyzed and computed.

No matter what happens, the report disclosed some bad news for riders. Current plans call for increasing fares by 5 percent next year and 5 percent again for the fiscal year that begins July 1, 2011. Combined, the two increases would raise the base cash fare by a quarter, to $2.25, for a Zone 1 ride.

Some recommendations from the fact-finder who concerned herself almost entirely with financial issues:

• Wages would be increased by 3 percent on Jan. 1 of 2009, 2010 and 2011, ultimately raising the average bus-trolley operator's base wage to about $25.70 an hour and about $30 an hour for first-level supervisors in the final contract year.

• Union contributions toward health, drug, dental and vision care, currently 1 percent, would be increased in steps to 3 percent of base wages, the same as management and non-represented employees are now assessed.

• For the first time, employees in the PPO plan would have to pay a deductible: $250 for singles and $500 for families. Those enrolled in an HMO would be charged a $20 co-pay for doctor visits. Prescription co-pays also would be increased for everyone to up to $45.

• A $500-a-month pension supplement would end for employees who retire early. The average retirement age is now 56.

• Up to 150 days of unused sick leave that can be used to calculate pensions would be reduced to zero by Aug. 1, 2010.

• Employees retiring before age 60 with 30 more years of service would contribute the same 3 percent toward health care as active employees but would retain coverage. Those under age 65 with between 25 to 30 years of service could retire early too, but they'd have to reimburse the authority for 100 percent of their health care costs or get their own.

Ms. Rigler did not address management requests to reduce growing absenteeism, outsource work, restrict paying overtime until after 40 hours in a week and change operating rules and procedures that it said could help reduce operating costs.

Rather, she wrote, "Any other matters not previously agreed upon or specifically addressed are recommended for withdrawal" from inclusion in a new contract.

Although it has weighed heavily on public opinion in the past, the fact-finding process has never resulted in a Port Authority contract.

Local 85 President-Business Agent Patrick McMahon said the union's executive board will meet Thursday to consider the report. He characterized the recommendations as "a mixed-bag that isn't encouraging. Except for the wages, everything in there pretty much represents concessions on our part."

Port Authority spokeswoman Judi McNeil issued a statement on the report.

"We recognize that the issues are numerous and complex and they affect the lives of transit riders, taxpayers and Port Authority employees. Ms. Rigler's recommendations will be carefully analyzed and our board of directors will act on the fact-finder's report within the 15-day allotted time."

The authority's nine-member board is to meet in special session on Sept. 12 to act upon the report.

Ms. Rigler said her recommendations will enable the authority to restructure costs for union employees in a manner similar to how they've been restructured for non-represented employees.

"Local 85 employees will see their wages increase while, at the same time, continue to enjoy an enviable benefits package," she wrote. "Throughout the fact-finding process, it has been made plain to the bargaining representatives of the authority and the union that their respective constituencies must be prepared to live with recommendations considerably less attractive than what each would like."