Transport bosses have said they are "astonished" that drivers on the Tyne and Wear Metro have turned down a 15% pay rise.
Operator Nexus described the increase over two years on top of annual cost of living rises as "unprecedented".
However, it was rejected in a ballot of members of the Aslef and RMT unions, who could now take industrial action, probably a ban on overtime.
Aslef said Nexus has broken promises and came "up short" with its offer.
Nexus has urged the unions "to get round the table" to finalise a deal.
The company said a higher pay award coupled with improved terms and conditions in rosters was "unaffordable and unrealistic".
'Deliver on promises'
Chris Carson, from Nexus, said: "We're astonished that this offer has been rejected.
"The trade unions have not made any suggestions as to where the money should come from to pay for this."
An Aslef spokesman said the union was "disappointed" that bosses decided "at the last moment, to come up short".
"The company needs to get its act together, deliver on promises it made in private, and make sure it trains and retains the right number of drivers it needs to run the service it has promised passengers it will deliver," he said.