Victor Basargin said half the money would pay for new buses, while the rest would be spent on municipal vehicles and road-building equipment. He stressed that all the vehicles should be made in Russia.
He added that regions would have to apply to receive the funds, and that 30% of any expenditure should come from regional budgets.
Prime Minister Vladimir Putin declared on December 19 that the government should only buy Russian-made vehicles.
"Budget money, the funds of natural monopolies and, I hope, the largest private companies should be spent on buying domestically produced products," he said.
The prime minister's words are already having an effect: a spokesperson for the Far Eastern Amur Region said on Saturday that the governor was selling all foreign cars owned by the regional government.
"On Friday, Oleg Kozhemyako began the process of auctioning off all the regional government's foreign cars," the spokesperson said.
"Officials should support the Russian automobile industry not just with words but with actions and move to domestic cars," the spokesperson said. "Oleg Kozhemyako has already changed his official Mercedes S500 for a Russian Volga."