U.S. Transportation Secretary Ray LaHood announced that selected transit agencies in cash-strapped municipalities from coast to coast and Puerto Rico may now use certain Federal Transit Administration (FTA) funds to cover the cost of the gas, diesel, and electric power that keeps buses, light rail, streetcars, and other transit vehicles up and running.

The recipients benefiting from this spending flexibility appeared in today’s Federal Register. The provision,part of Congress’s FY2012 appropriations legislation, allows transit operators in the most populated urban areas to use a portion of their allocated FY2012 FTA funds specifically for this purpose. Thanks to this added flexibility, smaller cities across the nation will be better equipped to handle increased ridership and higher operating costs that typically result from rising oil prices. With a total of up to $100 million in funding nationwide, the program will not add to the deficit or increase government expenditures.

“As our economy continues to recover, we must ensure that Americans have reliable transportation choices that provide access to jobs and other vital services,” said Secretary LaHood. “Rising fuel prices impact the nation’s transit providers, too, and this measure delivers critical relief that will ensure that buses, light rail, and other vehicles are on the road at a time when their service is needed most.”

The flexible funding provision means that a large city like Houston, for example, where transit capacity is expanding rapidly, may apply more than $2 million in funds toward fuel and utility costs; Las Vegas may use more than $680,000; and Atlanta may use more than $6 million. The allocations are made in proportion to the funding levels these areas typically receive on an annual basis from FTA.

Under the provision, smaller cities can make their federal dollars go further as they do not need to match federal funds dollar-for-dollar, as was required in the past. For example, Panama City, Florida, may use nearly $140,000 to pay for fuel; Pascagoula, Mississippi may use $25,000; and Sioux Falls, South Dakota, may use more than $190,000.

“This flexibility brings short-term relief to the nation’s cash-strapped transit agencies and keep buses and trains running for the riders who depend on them,” said FTA Administrator Peter Rogoff. “We continue to call on Congress to pass a bipartisan transportation bill that includes timely and targeted operating assistance during tough economic times as proposed in the President’s budget.”

President Obama’s proposed budget for FY2013 would bring additional relief by allowing transit agencies in large urban areas to qualify for temporary and targeted operating assistance over a three-year period, if the economy declines. This would, for the first time, trigger the ability to tap federal funds normally used for capital costs to be used instead to cover the cost of fuel and other operating expenses. The provision would help transit agencies avoid service cutbacks and layoffs during tough economic times.

More than 175 urbanized areas in 40 states and Puerto Rico responded to FTA’s announcement published in the Federal Register on Jan. 11, 2012, requesting designated recipients to submit maximum eligible expenses for reimbursement. The total funding amount requested was $237.1 million. FTA has allocated a portion of the $100 million to every urbanized area that responded to the announcement.