Port Authority financial projections show it could run out of cash sometime in December and may be forced to curtail operations, Chief Executive Officer Steve Bland has warned.

That would likely result in shutting down service at the end of the year for people who account for 230,000 daily bus, trolley and incline rides.

In brief responses to reporters' questions following yesterday's monthly board meeting, Mr. Bland spoke of problems that suggested an uncertain future for public transit in Allegheny County.

He said that if the authority is unable to cut labor costs, "We're staring down the barrel of a $20 million deficit" for the next budget year that begins July 1. That situation could mean a combination of increasing fares, cutting bus-trolley service by 30 percent and laying off hundreds of employees.

By comparison, 29 bus routes were eliminated, runs were cut on other routes and 300 employees were laid off when service was cut by 15 percent in June 2007.

For service to be halted altogether, the state would have to stop granting operating subsidies, based on the Port Authority's inability to provide a matching share of local money. Allegheny County Executive Dan Onorato has been withholding the county's share, currently being derived from a drink tax, until the authority and Local 85, Amalgamated Transit Union, reach a new cost-savings contract.

Nevertheless, the state has already been advancing money for more than a year to keep the Port Authority afloat while it works out labor and funding problems. The authority has been borrowing to provide the local match.

"As far as shutting down, that'll be Mr. Onorato's call, not ours," said Patrick McMahon, president-business agent of Local 85, which represents 2,300 employees. "If he would release the (county) money, there would be no need to shut down."

No progress was reported yesterday in what have become the most contentious labor negotiations since 1992, when the union staged a 28-day strike.

Mr. Bland said a bargaining session Wednesday before a state mediator produced no breakthrough and that both sides are "back to square one."

Local 85 members continue to work under terms of the contract that expired June 30. So far, they've neither taken a strike authorization vote nor indicated they may walk off the job.

But there has been little apparent urgency to settle the impasse that has become rooted in politics, including Mr. Onorato's decision to withhold money until the authority and union reduce legacy costs in such areas as health care and retirement benefits.

Mr. Bland said management proposed six dates to the union for resuming negotiations but they chose only Wednesday. The session broke up after about two hours.

Only one session is being discussed for next week, probably on Wednesday again.

"We're not looking to maintain the status quo" in employee benefits, Mr. Bland said. "We're not looking for little tweaks" in the former contract.

It was two weeks ago yesterday when the authority accepted a fact-finding report that recommended terms of a labor settlement. But the union's executive board rejected the report. Both sides would have had to accept the report for it to become the basis for a new contract.

"You share my disappointment" with the union's decision, Mr. Bland told board members. "I don't know the reason why it (fact-finder's report) was rejected."

He said the board views a new labor agreement with urgency despite the lack of progress during the last two weeks.

"If there's a sense of urgency, they don't show it," Mr. McMahon said. "If they come to the table and want to be reasonable, we can get a deal done."