PORT TOWNSEND – Merchants smarting from holiday business losses are expected to tell Washington State Ferries officials today that they need a vehicle ferry.

Many are talking about layoffs or cutting back employee hours because of business they say they have lost since vehicle ferry service between Port Townsend and Keystone was stopped on Nov. 20.

Passenger ferry service on the MV Snohomish hasn’t helped they say, with numbers of riders on each run dropping from hundreds to dozens.

The Port Townsend-Keystone Ferry Route Partnership Group will meet at 9:30 a.m. today at the Pope Marine Building on City Dock, Water and Madison streets.

The meeting is expected to include state Department of Transportation Secretary Paula Hammond and Washington State Ferries officials.

Hammond pulled the last two operating 80-year-old Steel Electrics from service because of corrosion found in the MV Quinault‘s hull and safety concerns for all of the four aging boats on the Port Townsend-Keystone and San Juan Island runs.

Hammond has bounced the fate of the vessels to Gov. Chris Gregoire, who is scheduled to announce her ferry budget proposal for 2008 on Thursday.

State ferries leaders have recommended that the Steel Electrics be scrapped.

For Teresa Verraes-Landis, the idea of having no car ferry this summer in Port Townsend is beyond belief.

“It really blows my mind,” said Verraes-Landis, who has owned and directed Artisans on Taylor Street for three years.

She has experienced a 30 percent loss during holiday shopping compared to the same time last year, she said.

“There’s a ripple effect to uptown as well as downtown."

She has noticed a loss of Canadian, Bellingham and Whidbey Island customers.

She and other business community members are working together, in an effort to market the fact that there are other routes leading to the Quimper Peninsula and Port Townsend.

“We want people to come. There are deals here,” she said.

“It’s a beautiful place to be to get away from the woes of the world.”

Mark Burr, who co-owns Water Street Brewing and Alehouse on Water and Quincy streets, said he and his partners have seen a 15 to 20 percent loss of sales compared to the holiday period last year.

Staff has been cut back by 20 hours a day, he said.

“We’ve always shown growth from month to month but this is the first month we have not,” said Burr.

Special events will carry the popular tavern over, he said, such as the Winter Festival that featured nine bands, and in January the annual Strange Brew Fest.

“It’s already so slow in the winter months, and you just have to do everything you can to get through it,” Burr said.

The Manresa Castle hotel on Sheridan Street in Port Townsend has had at least a 20 percent drop in business, said Preston Massey, general manager of the hotel built in 1892.

That’s 20 percent down from the already slow-business winter season.

Massey, showing noticeable frustration at the situation he calls a “Washington State Department of Transportation-created crisis,” said business will only get worse if a vehicle ferry is not quickly restored.

“We’re studying it on a daily basis. We may have to do some layoffs,” Massey said.