Calling it a “bitter pill” to swallow, Steamship Authority governors said Tuesday they would back an operating budget for the coming year that will include across-the board rate hikes.

“It is what it is,” Nantucket governor Rob Ranney said after senior managers presented the proposed $112 million operating budget.

A formal vote on the budget is expected next month.

Meanwhile, with traffic numbers showing improvement month by month, SSA general manager Bob Davis painted a much rosier picture of formerly dismal year-end revenue projections, hinting that the ferry line may not even need to request state aid as previously planned.

The projected deficit for this year — pegged early in the season at around $60 million — is now closer to $10 to $12 million, boat line treasurer Mark Rozum estimated. The reason is increasingly strong traffic numbers, Mr. Davis said.

“If traffic continues to hold up the remainder of the year, there is a possibility that the state would not have to be covering any deficit,” he said.

But with the coronavirus pandemic still affecting travel, substantial unknowns remain regarding the boat line’s financial future, officials said. At the monthly board meeting Tuesday, Mr. Rozum and Mr. Davis explained the rationale behind the proposed 2021 operating budget, saying they expected car traffic to normalize to its pre-pandemic levels and passenger traffic to sit at 90 per cent of regular numbers. The expected decline in passenger traffic would necessitate an approximately 7 per cent rate adjustment, leading to the substantial fare hikes in every category.

“No surprise, the Covid-19 is playing a significant role in our forecast for 2021,” Mr. Rozum said.

After traffic crashed in April and May, automobile traffic has either reached or exceeded pre-pandemic levels in recent months. Passenger traffic continues to lag slightly, sitting at about 85 per cent of its normal levels in September.

The rate adjustments would mainly be felt in summer peak vehicle pricing, with $15 one-way increases. But there are also proposed rate increases for normal vehicle fares, as high as $6 one-way, and passengers.

Governors posed questions to senior managers regarding the methodology, but in general accepted the rate increases with a mix of deference and understanding.

“You’ve done a nice job pulling this whole thing together,” Barnstable governor Bob Jones said. “We’re really kind of locked in with our fixed costs . . . I think we’re just caught between a rock and a hard place.”

Vineyard governor James Malkin agreed, saying that the varied unknowns caused by the virus made conservative budgeting necessary.

“People want to get back and forth, and are using the boats. The day trippers are not. And if we’re going to keep things running for the people who need to get on and off, and the goods and services that need to get on and off, we have to do what we can to keep the boats running and we can’t stop maintaining them,” Mr. Malkin said. “This is, unfortunately or sadly, the only reasonable and sound, prudent way to deal with it.”

SSA spokesman Sean Driscoll said public forums will be scheduled to discuss the rate adjustments in anticipation of a vote to approve the 2021 operating budget at the November board meeting.

Looking at revenue and traffic numbers for 2020, SSA managers said springtime fear of a massive budget shortfall appears to have been averted.

Under the SSA enabling legislation, taxpayers in the five port communities can be assessed in the event of an operating deficit. But in light of the pandemic, earlier in the summer the state legislature approved an amendment to the state budget that would temporarily shift the burden of any operating deficit onto the state on a one-time basis.

Four months later, and ferry traffic — particularly vehicle traffic — has rebounded steadily, buoying the boat line with a strong late summer and fall and potentially rendering state aid unnecessary. If the deficit is small enough, Mr. Davis said it could be offset by an influx of approximately $10 million in federal CARES Act money that the boat line received early on in the pandemic.

The SSA also secured a $10 million line of credit from MV Bank that it has not yet used.

September saw a 15 per cent increase in vehicle revenues, Mr. Rozum said, while October has seen a 39 per cent increase over projections. Even passenger traffic has matched projections in October, and bookings for November are on pace with projections, Mr. Rozum said.

“Right now, I think we still would be in a position where the state would need to come up with a portion of this,” Mr. Davis said. “But the hope is that things continue to improve here and that we’re able to avoid that situation.”

In other business Tuesday, governors heard updates on a variety of vessel maintenance, dry dock and capital improvement projects.

The Oak Bluffs terminal is scheduled to close Wednesday, after which phase two will begin on a series of wharf repairs, including piling replacement.

A report from a consulting company found that the Thomas B. Landers lot in Falmouth could work as a site for a solar array. The SSA could rent the space for between $175,000 and $350,000 and generate nine megawatts of energy, the consultants said. Mr. Davis had requested the proposal.

The board also licensed the SeaStreak fast ferry to provide inter-Island on Thursdays, Fridays and weekends through Jan. 3, 2021, running from New Bedford to Oak Bluffs to Nantucket.

Mr. Davis began the meeting with a moment of silence for former Barnstable governor Bob O’Brien, who died last month. Mr. O’Brien had served on the board for 30 years and overseen the construction of at least four new ferries, as well as a new Hyannis terminal.

“The list of projects that were undertaken during his tenure is staggering,” Mr. Davis said. “It’s not an exaggeration to say that the Steamship Authority would not be the organization is today if it wasn’t for Bob’s guidance and oversight.”