With none of the fireworks that often accompany SEPTA's financial dealings, the transit agency's board yesterday approved a $1.095 billion operating budget for the year that begins July 1.

No fare increases are needed to fund the budget, which is $73 million, or about 7 percent, above the current one. Much of the increase is due to higher fuel costs; SEPTA budgeted $21 million more for diesel for its buses, a 56 percent rise.

With ridership up, a new general manager, and a new predictable stream of state subsidies, SEPTA breezed through its budget season with unfamiliar calm. The board approved the budget yesterday without discussion or dissent, on a voice vote.

The biggest cost, $754 million, covers salary and fringe benefits for SEPTA's 9,358 employees. Other budgeted expenses are $196 million for materials and services, $35 million for injuries and damage, and $32 million for electric propulsion power.

The budget anticipates an increase of 137 employees, mostly bus and train operators and customer-service representatives.

On the other side of the ledger, the biggest source of revenue is subsidies from state, local and federal governments: $634 million. Of that, $528 million is to come from the state and $71 million from local governments.

In July, the legislature passed a landmark bill that provided SEPTA and other Pennsylvania mass-transit agencies with a long-sought dedicated source of state funding. That was designed to end the annual budget brinkmanship as SEPTA threatened draconian fare hikes and service cuts if the state did not increase funding.

The new law, Act 44, is under fire in Harrisburg from upstate legislators angry about its provisions for installing tolls on I-80 across Pennsylvania. The plan to toll I-80 may be in jeopardy, as the federal government has not approved it.

And Gov. Rendell this week asked the legislature to approve leasing the Pennsylvania Turnpike to a private operator for $12.8 billion to replace part of Act 44 as a source of funding for transit, highway and bridge funding.

Philadelphia provides roughly 82 percent of SEPTA's local subsidy, with Delaware County providing about 9 percent, Montgomery County 5 percent, Bucks County 3 percent, and Chester County 2 percent.

Fares are expected to provide about $400 million. SEPTA expects about $20 million more in passenger revenue in fiscal 2009 due to increased ridership. Rail ridership was up 11 percent in the first 10 months of fiscal 2008, to the highest level since the 1970s. City bus, subway and trolley ridership was up 5 percent.

The SEPTA board yesterday also approved a capital budget of $368 million for the new fiscal year. Most of the money is earmarked for the completion of the Market-Frankford El reconstruction in West Philadelphia, the purchase of buses and rail cars, and improvements at rail stations.

Contact staff writer Paul Nussbaum at 215-854-4587 or pnussbaum@phillynews.com.