Gov. Charlie Baker signed a supplemental FY2020 budget into law on Friday, officially shifting the burden for this year’s projected Steamship Authority deficit from the five port communities onto the state.

The signing of the supplemental budget was the final step in a long process to render the port communities — Martha’s Vineyard, Nantucket, Falmouth, Hyannis and New Bedford — harmless if the boat line runs a deficit in 2020. A version of the bill passed the state senate earlier this month and was reconciled with the house Monday. It awaited a final signature from Governor Baker.

In a letter to state legislators that went out Friday, the governor detailed his decision to approve the supplemental budget. The bill authorizes $1.1 billion in direct appropriations that the state hopes can be reimbursed by the federal government, including the amendment over the SSA deficit.

State Sen. Julian Cyr, who represents Nantucket, Martha’s Vineyard and parts of the outer Cape, sponsored the amendment.

“The core purpose of this bill is to establish spending authorization for costs that the commonwealth has incurred and continues to incur in response to the Covid-19 outbreak,” the governor wrote. “Now that this authorization is in place, state agencies can finalize the documentation needed to secure federal reimbursement where available.”

In mid-April, the state-chartered ferry line that’s the lifeline to the two Islands faced a snowballing financial crisis after traffic plummeted due to the pandemic. The SSA is one of the only transportation agencies in the country that relies solely on the fare box for its operating revenues, providing it with unique independence but also leaving it vulnerable in the event of swift changes in ridership.

With the pandemic still in full swing, general manager Bob Davis wrote an urgent letter to Governor Baker requesting immediate financial assistance to keep the ferry service afloat. While federal funding from the CARES Act remedied the near-term financial problems, a mounting deficit still loomed.

At a meeting Tuesday senior managers estimated the deficit could run around $25 million by the end of the year. The annual operating budget for the boat line is around $120 million.

According to the amended 1960 charter, the state can levy an assessment on the five port communities in the event of a deficit.

The SSA has not run a deficit since 1962. A $25 million deficit could cost the Vineyard towns nearly $9 million.

But now that burden has been temporarily shifted onto the state. And because it was included in the state’s supplemental FY2020 budget, it is eligible to be reimbursed by the federal government through Federal Emergency Management Agency and the CARES Act.

“As such, the net state cost is expected to be $0,” the governor wrote.

In an emailed statement to the Gazette Friday afternoon, Mr. Davis thanked state agencies and legislators who worked on behalf of the boat line and port communities.

“We are extremely grateful that the governor, the legislative delegation, and the Executive Office for Administration and Finance worked together on behalf of the Woods Hole, Martha's Vineyard and Nantucket Steamship Authority to add clarity to our finances in the wake of the economic devastation caused by the Covid-19 pandemic,” the statement said.

“The bill that Governor Baker signed today will provide relief to the port communities we serve during these difficult economic times. We are fortunate to have elected officials who are responsive to the needs of the citizens and communities that depend on the vital transportation services we provide to and from the Islands.”