Cash-strapped public transit systems are cutting services and raising fares even as more Americans ditch their gas-guzzling cars for trains and buses, a survey of transit agencies out today finds.

People took 2.8 billion rides on public transit from April through June, up 5.2% over that period last year, reports the American Public Transportation Association (APTA), which represents transit agencies.

The increase marks the highest ridership for that period in half a century, says William Millar, APTA president. "We're seeing record ridership, but it is a double-edged sword," he says. "We're going to see more (fare) increases and more service cuts at a time when the nation is trying to encourage people to use public transit."

Of the 115 agencies that responded, 61% are considering fare hikes to make up for budget shortfalls, while 35% say they may cut services.

Only about one-third of costs are covered by fares, APTA says, so transit agencies rely in part on public funding. Funds tied to the health of the economy, such as sales taxes, have been drying up, Millar says. Gasoline prices also are hurting providers.

"We've fought for years to have more people using mass transportation to reduce pollution and reliance on foreign oil," says Rod Diridon Sr., executive director of the Mineta Transportation Institute at San Jose State University. "Now we have the market ... but we don't have the capital funding."