The Steamship Authority is facing a $5 million gap between its projected revenues and expenses next year due to an unprecedented $15 million rise in costs, paired with a decline in revenues.

To cover the shortfall, the boat line is now considering its largest fare increase ever, raising rates across the board for passengers, vehicles and parking.

The dramatic rise in expenses comes after a rocky year at the boat line. Crew shortages have plagued the Steamship, its general manager announced he planned to resign next year and cancellations piled up throughout the summer.

Still, the extent of the cost increases caught some members of the Steamship Authority’s port council off guard when it was unveiled Tuesday.

To pay for the higher expenses, the boat line is pondering walk-on tickets going up by $1, excursion fares rising (Islander vehicle rates) between $3.50 and $5, and standard fares (off-Island vehicle rates) jumping between $6 and $25.

“I think the expense increase is extraordinary,” said Rob Munier, the Falmouth member of the advisory board. “I need to be sure I understand that. I don’t know that we’ve ever had a $15 million expense increase in a given year.”

Unprecedented rise in expenses caught Steamship representatives by surprise at port council meeting. — Ray Ewing

Steamship staff said the 2025’s higher costs were tied to increased training, and higher costs for insurance, technology and employee salaries.

The largest estimated increase in costs is related to the Steamship’s payroll, said Mark Rozum, the Steamship’s treasurer. The boat line is currently negotiating with its licensed deck officer union for a new contract, and Mr. Rozum said the Steamship Authority expects to be paying $7.6 million more in salaries next year — 16 per cent higher than in 2024.

The Steamship Authority also expects an additional $3 million for its IT expenses, a 113 per cent increase from last year, as the boat line tries to finish its new reservation system and website. It also estimates there will be an extra $1.2 million in vessel maintenance and $1.1 million in insurance given that new freight vessels will be coming online.

Daily parking fees on the Vineyard route could go up between $2 and $7 depending on the time of year and day of the week, and annual permits to park at the Falmouth Palmer lot could go up by $100.

The fares will need to be voted on by the Steamship Authority’s board of governors, and several budget workshops are planned for the coming weeks.

But Mr. Munier wondered if there would ever be a point where the cost of coming to the Islands — Nantucket will also see raised rates under the current proposal — could make tourists pause.

“[We] don’t want to find ourselves where we’re raising rates so much that we actually don’t generate the revenue,” he said.

Aside from the projected rise in expenses for the ferry system, changes in travel patterns have caused revenues to decline. The number of standard automobiles that have been coming to the Island have been falling for the last several years, while the number of excursion cars has gone up. That has resulted in lower revenues because excursion vehicles, which are charged a lower rate, are subsidized by standard vehicles.

Joe Sollitto, the Oak Bluffs representative on the port council, believed the drop in standard automobile traffic was due shifts in the Island’s population and more second homeowner’s leaving vehicles on the Island.

That could have also resulted in more vehicles becoming eligible for excursion rates, and fewer standard vehicles making the crossing.

“I think since Covid, there’s been an increase of people living here,” he said.

According to census records, the population grew by about 6,000 people between 2000 and 2020, now counting about 20,000. There are about 15,000 excursion customers, about 62 per cent of who are on the Vineyard route.

With these shifts, excursion trips in 2024 made up nearly 39 per cent off all vehicle crossings, up from 35 per cent in 2019.

Island officials also believed that there could be more excursions now because of the dwindling services here. That has necessitated more Islanders to have to go to the mainland for doctor’s visits, veterinarian trips and other appointments, said James Malkin, the Vineyard representative on the Steamship board of governors.

“There are fewer practitioners of various kinds on the Island,” he said. “The way we live on the Island now, we go back and forth more than we used to.”

The last time the excursion rate for passenger vehicles, which is now between $73 and $136, was raised was in 2021.

In interviews with the Gazette last month, several Steamship board members said they saw the writing on the wall when it came to cost increases. For Mr. Malkin, he wanted to make sure that the rising rates were distributed in a fair way.

“The money needs to come from everyone who uses the Authority boats,” he said. “At least from my point of view, I will try to deal with this as equitably as possible.”