Battle lines were redrawn and the transit labor war escalated yesterday, when the Port Authority board voted to unilaterally impose a new contract on the union representing 2,300 bus-trolley operators, mechanics and other hourly workers.

The three-year contract, which provides 3 percent annual wage increases and encourages later retirements, will go into effect Dec. 1 for members of Local 85, Amalgamated Transit Union. They have been working under terms of the former pact for nearly four months now.

The board voted 8-0 to impose its "last and best offer" after declaring a negotiating impasse with the union, an action the authority said is allowed under federal law.

"It became painfully clear to management earlier this week that the prospect of reaching a negotiated settlement with [union] leadership was hopeless," authority Chief Executive Officer Steve Bland said.

The union took measures of its own earlier in the day, charging management with failing to bargain in good faith in papers filed with the Pennsylvania Labor Relations Board.

After the authority board meeting, Local 85 President-Business Agent Pat McMahon said he believed an imposed contract is illegal and indicated that union attorneys are likely to challenge the action in court.

He also said the union is looking into suing Allegheny County Executive Dan Onorato, saying he is illegally withholding $27.7 million in county drink and car rental tax revenue from the authority, an action that could render it unable to pay bills and meet payroll in December.

A strike, an unauthorized sick-out or the authority running out of money do not appear out of the question.

But for now, buses, trolleys and the Monongahela Incline will continue to serve patrons, who account for an average of 230,000 rides a day.

Mr. McMahon indicated that union employees would continue to do their jobs and keep the system running -- at least for a while.

"We care about the citizens of Allegheny County and our riders. "We're not going to do that to them," he said, referring to a strike.

Mr. Bland said he recommended yesterday's action -- "a radical step" -- after determining that trying to negotiate a new contract with Local 85 had become hopeless. No Port Authority board had ever before tried to impose a contract on a union in 44 years of operation.

"Local 85 leadership has not moved one inch nor lifted one finger to help us achieve the savings we must obtain to stabilize the authority's cost structure," Mr. Bland said. "Their recalcitrance has continued despite the ongoing sacrifices made by our riders, taxpayers, nonrepresented employees and our police [union] in order to preserve a viable public transportation system."

He targeted Local 85's leadership, its 20-member executive board, which rejected a fact-finder's report Sept. 12, hours after the authority board had accepted it. Had both sides agreed, the report would have been the basis for a new contract.

He said rank-and-file union members "are not the problem. It is their elected leadership who cling to their outrageous demands and continue to refuse to allow their members -- our employees -- to have a say in their own lives."

Mr. McMahon unleashed a barrage of criticism against the board, Mr. Bland and Mr. Onorato.

"They're pointing fingers and blaming the union, the same as they've always done in the past. It's the Port Authority that has been stonewalling from day one. They're willing to spend money to fight us, but they're not willing to spend the time and money to settle the contract," he said.

The contract imposed yesterday would:

• Provide annual pay increases of 3 percent a year, putting the average hourly wage for bus-trolley drivers at $25.70 and for first-line supervisors at about $30 at the end of the contract in the 2010-11 fiscal year.

• Require Local 85 members, who now contribute 1 percent of their base pay toward health care costs, to pay the equivalent of 3 percent by the end of the contract.

• Encourage current employees to work longer, most to age 60, and contribute more to qualify for post-retirement health care. Those hired on or after Dec. 1 would not be eligible for post-retirement health care.

• Increase pension contributions from the current 4.5 percent to 5.5 percent on Jan. 1, and to 6.5 percent effective Jan. 1, 2010.

• Eliminate overtime for more than eight hours worked in a day, making it payable only when an employee works more than 40 hours in a week, a strategy to reduce chronic absenteeism and prevent employees from making up the lost pay by working overtime another day.

• Eliminate a contract provision that allows employees to show up late for work 13 times before receiving a written warning, a strategy to keep transit service on time.

• Expand the authority's ability to subcontract when it can save money on tasks ranging from cutting grass and cleaning vehicles to providing off-board fare collection.

Authority negotiators argued heavily for the last three items during the fact-finding process, but the state-appointed fact finder did not recommend them.