Higher costs for ferry and terminal maintenance and other operating expenses, combined with an overall decline in revenue, are spurring the Steamship Authority to consider raising rates in 2026.

Next month, the boat line’s board of governors will vote on ticket, freight and parking rate increases averaging about 5 per cent across the board, as proposed by treasurer and comptroller Mark Rozum in his $162 million draft operating budget for 2026.

The Steamship Authority needs the fare hikes to close a projected $7.4 million gap between income and revenue, Mr. Rozum said at Tuesday’s board meeting on Nantucket.

Without the adjustments, he said, the ferry line would be in the red next year across most of its income categories, with only slight increases in passenger and freight revenue compared to 2025.

At the same time, the Steamship Authority is facing significantly greater operating expenses in several areas, including an overall 21 per cent hike in maintenance costs for ferries and terminals.

Vessel maintenance, excluding labor, is up 25 per cent in the new budget and terminal maintenance — including for dolphins and docks — is up a whopping 63 per cent.

Five ferries are scheduled for overhauls in 2026, Mr. Rozum said, with the rest of the fleet due to be drydocked the following year.

“We’ve got to keep the boats running. That’s what we’re here for. This is the core function of our business, and that’s what the customers expect of us,” he said.

The Steamship Authority also is looking at a 13.6 per cent increase in depreciation and lease amortization expenses next year with the addition of the new MV Monomoy, two new electric buses, the new reservations system and the completion of the Woods Hole terminal buildings.

Payroll is rising 4.9 per cent in 2026, with other employment costs rising from just over 2 per cent for pensions to 4.5 per cent in payroll taxes, for a total increase of $850,000 over 2025.

The boat line also is spending more on employee training and information technology, including the long-awaited reservations system that’s now under development, Mr. Rozum said.

Fuel costs are projected to be 2.2 per cent lower, with the exception of the non-diesel, low emissions RD-99 fuel used aboard the M/V Island Home in a pilot project this year.

“To continue the program will be [an additional] $1.50 a gallon,” Mr. Rozum said.

“The Island Home uses roughly 400,000 gallons … so that would be about a $600,000 increase. If we converted every vessel, you’re looking over a $5 million adjustment, or doubling — almost doubling — the rate adjustments.”

The proposed fare increases have elicited some pushback on the Vineyard.

The Oak Bluffs select board this week voted unanimously to oppose the draft rate increases, in a letter sent Tuesday to the Steamship Authority board from town administrator Deborah Potter.

The proposed 50 cent increase in walk-on passenger fares would jeopardize the Island port towns’ bid to increase the existing 50 cent embarkation fee, which the authority passes on to the towns each year to make up for the local burden of hosting ferry terminals.

“An increase in passenger ticket prices at this time could undermine our pending legislative request for a fair adjustment of the embarkation fee, which is essential to offset municipal impacts,” she wrote.

The Oak Bluffs letter also opposes increasing the Island-based excursion fares, which have not been raised since 2021.

“Discounted excursion rates are not a convenience, but a necessity for year-round Islanders allowing access to medical care, vehicle maintenance education and other essential needs,” wrote Ms. Potter, adding that excursion fares also should not be raised to make up for unscrupulous users who take advantage of the system.

“If abuse is concentrated among a small fraction of users, a tiered approach may be more equitable, for example maintaining current rates for the first 25 trips annually with incremental increases thereafter,” she wrote. “This would target abuse while preserving affordability for the vast majority of legitimate year-round residents.”

Mr. Rozum raised the concept of a tiered approach at Tuesday’s board meeting, along with the possibility of changing the eligibility requirements for the excursion program to screen out ineligible users.

“It wasn’t meant for a second homeowner to come to visit the Islands in the summer. It wasn’t meant to subsidize someone’s business. It’s meant to help the Island residents who have an extra layer of logistical complexity, leaving the Islands to take care of the necessities of life,” he said.

Over the years, Mr. Rozum said, the proportion of excursion fares — which sell for a fraction of the Steamship’s cost to carry the cars — to standard full-fare vehicles has risen to more than 41 per cent of all car trips in 2025.

The draft budget proposes increasing excursion fares on the Vineyard route by $1.75 from January through mid-May and from mid-September through the end of the year, and by $2.75 in high season.

Standard vehicles are penciled in for increases of between $3.50 and $6, depending on day and date, and the 10-ride auto coupon book is going up $55.

The proposed 50 cent hike in walk-on fares is accompanied by a 25 cent increase for half-price tickets. Ten-ride adult fare cards would rise $4.50 and $2.75 for the lower rate and the 46-ride card would go up $9.25.

Daily parking is set to go up $5 a day from January through March and November through December, and $6 a day on other dates.

Parking permits will rise $200 for the Woods Hole lot and $50 for the Palmer avenue lot in Falmouth.

Freight is slated for a 5.5 per cent increase.

Islanders will have their chance to discuss the draft budget with Mr. Rozum and assistant treasurer Courtney Oliveira at an open house on the Vineyard, tentatively scheduled for Oct. 2.

“We’re looking to firm up that date right now,” Mr. Rozum said.

Following budget open houses on both Islands, the port council will review Mr. Rozum’s draft and make its recommendations to the board of governors, which is scheduled to vote on the budget Oct. 21 at the Tisbury emergency services building in Vineyard Haven.