Updated 12:22 pm, Saturday*
The Steamship Authority’s finances are so dire that the ferry line cannot operate beyond the end of May without “urgent financial assistance” from the commonwealth, a Friday press release states. In a letter to Governor Charlie Baker Thursday that was copied to Massachusetts Speaker of the House Robert DeLeo, Senate President Karen Spilka, and other officials, SSA general manager Bob Davis pleaded for financial assistance. Davis informed Gov. Baker the ferry line was hemorrhaging $1 million a week.
“Should ridership trends continue at the current pace, weekly revenue losses will increase,” Davis wrote. “After reviewing these ominous figures, the authority is genuinely and credibly concerned that we will be unable to meet our statutory obligations to the islands by the end of May 2020.”
The release accompanying the letter paints a similar picture.
“The Steamship Authority will not be able to meet its statutory obligations to provide for the transportation of people and goods to the islands of Martha’s Vineyard and Nantucket beyond May 31, 2020 without financial relief due to the unprecedented decline in ridership-generated revenues amid the COVID-19 pandemic,” the release states.
Asked Friday morning if all ferries on both islands would halt on May 31 without an infusion of capital, SSA spokesman Sean Driscoll said,
“Yes, that’s our projection.”
Driscoll said he was unable to project what would happen to SSA employees on May 31.
“We don’t know; we’ve never been here before,” he said.
He added that the SSA projection for the end of May isn’t immutable should fiscal matters take another trajectory.
“We will do everything in our power to operate as long as possible,” he said.
In a brief statement released Friday evening, Representative Dylan Fernandes sought to bolster confidence by declaring SSA ferries wouldn’t halt.
“We are sailing in uncharted waters as this pandemic has upended every aspect of our lives and is causing unprecedented economic devastation,” he wrote. “The Steamship Authority is the most essential service islanders have to connect to the mainland. The boats are going to keep running and we are committed to working with our state and federal partners to ensure the viability of this critical lifeline for island residents.”
Later Friday evening, following a request for comment from The Times, Gov. Baker’s office channeled a response through the Massachusetts Department of Transportation.
“MassDOT has been in communication with the authority, and the administration is reviewing this request,” MassDOT communications director Jacquelyn Goddard emailed.
Driscoll confirmed information outlined in Davis’s letter about the present unavailability of port town assessments to stem the fiscal gap. Barnstable, Falmouth, Martha’s Vineyard, Nantucket, and New Bedford are statutorily on the hook for SSA deficits, but that process cannot take place until December 31, Driscoll said, hence the ferry line is begging for state help.
SSA chairman Jim Malkin, the Vineyard’s representative on the board, told The Times the public should attend the virtual board meeting Tuesday morning to learn more about the state of the ferry line.
“The issue of the Steamship Authority’s financial condition [came up] with Oak Bluffs a week ago, and then this week with the Dukes County Commissioners,” he said. “I am inviting all town officials, emergency officials, and interested residents to join the Zoom board meeting at 10 am on Tuesday, where cash, cost containment, and scheduling issues will be discussed. I had hoped the process of dealing with COVID-19 would have resolved itself sooner, so that the Island and its visitors would have a clearer picture into the summer. That has not happened. Despite the cost cuts and schedule reductions, the Steamship Authority is burning money on a weekly basis.” Malkin went on to say, the SSA is subject to a seasonal cycle much like many Vineyard businesses. “Historically the winter’s losses are made up with summer revenues,” he said. “We cannot see with any clarity, based on current bookings, that that will be the case this year.”
Oak Bluffs Selectmen Chairman Brian Packish, whose town is still reeling from news the terminal there is too unsafe to open, decried “gross mismanagement” at the ferry line and renewed his call for Davis’s ouster.
“If I were a state official, I would make it a requirement of any bailout,” he said.
Ralph Packer, whose Vineyard Haven maritime company Tisbury Towing and Transportation owns a number of barges and two tugboats, described the predicament the SSA is facing as “shocking” and said his vessels are available to transport goods to the Vineyard, if need be, in the future.
“If they need our help, we’re always available,” he said. Packer went on to say that “under the circumstances,” the SSA is doing “a good job.” Nevertheless, he said “if the Steamship doesn’t run boats, we’ll be in an extremely desperate situation.”
Packer stressed they have not yet reached out to him for assistance.
As far as the potential transportation of vital supplies with aircraft should a solution not come before May 31, assistant airport manager Geoff Freeman said Martha’s Vineyard Airport remains fully open.
“Any sort of emergency aircraft would be able to utilize the airport,” he said.
Dukes County Commissioner Keith Chatinover wrote in an email that the port communities shouldn’t ultimately be left saddled with the ferry line’s debt.
“The Steamship Authority halting operations on May 31 is obviously not a viable option for Martha’s Vineyard,” he wrote. “However, port town communities like ours must not be held solely responsible for alleviating this funding gap because the Authority is much, much more than just our lifeline. The Island, and by extension the Steamship Authority, is critical to the economy of the entire state and should be viewed as such.”
Even if the commonwealth provides emergency funds to the SSA either from its own coffers or Uncle Sam’s, the problems the SSA faces won’t be easily resolved. Per the ferry line’s enabling act, Driscoll said the operating fund — the fund used to run and maintain the fleet — cannot hold sums greater than “the current month and the next ensuing month” in the operating budget. Sums greater than that figure must be dispersed to other funds within the SSA.
“The law is very clear,” he said.
The problem appears to require intervention at the state level.
“There’s nothing that I’m aware of that the board could do as a work around,” he said.
Any solution the commonwealth might hand down would likely require money in “a fund that we could access on an ongoing basis as opposed to [delivered] in a lump sum,” he said. “It will require a unique solution.”
Under normal circumstances the legal mechanics of the ferry line’s enabling act stipulate that at the end of the SSA’s fiscal year, which is Dec. 31, it must notify the state treasurer if it needs help with a deficit.
“We would certify the amount of the deficiency,” Driscoll said, “then the commonwealth would give us the money and then they would assess the port communities to get their money back.”
The SSA would have to make it to December in order to exercise that type of request. And then it’s still unclear how the ferry line could digest such a sum given its two-month operating fund stricture.
Davis suggested in his letter that the commonwealth should consider the Municipal Liquidity Facility, a vehicle of the Federal Reserve Bank, as a potential solution to the SSA’s plight.
It wasn’t so much how the SSA would extricate itself that struck Edgartown Selectmen Chair Margaret Serpa Friday afternoon, but the gravity of the SSA’s finances overall.
“That’s something we’ve never seen before and the number and statistics they put in there are very alarming,” she said.
“This year, with the sudden development of the COVID-19 pandemic,” Davis wrote, “the Authority is currently managing an unforeseeable reduction in its operations. This reduction has occurred within a matter of weeks where we are enduring declines of seventy to eighty-five percent (70-85%) from projected traffic estimates forecasted only several months ago during our annual budgeting process for FY 2020. For example, as of April 15, 2020, we have experienced reductions of 71,000 passengers (-85%), 11,500 automobiles (-79%), and 5,650 trucks (-64%) month-to-date from the same period in 2019.”
*Updated to include forecasting examples from Robert Davis, and scenarios for financial rescue.
This is a developing story.