As anticipated, the Port Authority and the union representing bus-trolley operators were unable to reach agreement on a new contract before the old one expired at midnight yesterday.

They formally notified the Pennsylvania Labor Relations Board in a letter yesterday, requesting that the agency appoint a fact finder as required under state law.

Service likely will continue unaffected for riders making an average of 230,000 trips daily. During the fact-finding process, members of Local 85, Amalgamated Transit Union, are not permitted to strike or engage in other job actions.

The PLRB is expected to appoint the neutral fact finder at its July 15 meeting. Then the fact finder has 45 days to hear arguments and receive information from both parties and to issue a report proposing a contract settlement.

If either management or Local 85 rejects the report, an impasse is declared and the two sides likely would resume negotiations under the guidance of a state mediator, and possibly a federal mediator. The sides cannot pick and choose parts of the fact finder's recommendation; they must accept it in full or not at all.

Local 85 can vote to authorize a strike at any time after rejection of the fact finder's report, but President-Business Agent Patrick McMahon has said it's not something the union wants to do.

The 2,400-member union last walked off the job in late 1992. The strike lasted 28 days and took city and court intervention to end.

No negotiations were held yesterday despite the fact it was the last day to bargain before the current pact expired. The parties last talked face to face on Friday afternoon after both sides met separately with a state mediator.

Authority Chief Executive Officer Steve Bland and Mr. McMahon said the two sides have made little progress. They've sat at the bargaining table only about a dozen times since March.

Major items of contention are health insurance, including employee contributions, retirement provisions, pensions and other benefits that management said will soon consume more of the budget than wages and need to be brought under control.

Union leaders have said its members are not willing to give up things they've worked hard to achieve over the years and that previous authority management agreed to.

On Friday, the authority board of directors unanimously adopted a $350.2 million operating budget for the 2008-09 fiscal year that began today. Although the budget is 4.3 percent higher than last year's, it assumes a $10 million cost savings from the next collective bargaining agreement with Local 85 for the remainder of this year, and $20 million a year thereafter from all represented employees.