To allow States to elect to receive contributions to the Highway Trust Fund in lieu of participating in the Federal-aid highway program or certain public transportation programs.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``State Highway Flexibility Act''.

SEC. 2. DIRECT FEDERAL-AID HIGHWAY PROGRAM.

    (a) In General.--Chapter 1 of title 23, United States Code, is 
amended by inserting after section 149 the following:
``Sec. 150. Direct Federal-Aid highway program
    ``(a) Election by State Not To Participate.--Notwithstanding any 
other provision of law, a State may elect not to participate in a 
Federal program relating to highways, including any Federal highway 
program under the Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users (Public Law 109-59), this title, or 
title 49.
    ``(b) Direct Federal-Aid Highway Program.--Beginning in fiscal year 
2011, the Secretary shall carry out a direct Federal-aid highway 
program in accordance with the requirements of this section. Under the 
program, the Governor or chief executive officer of a State may elect, 
not fewer than 90 days before the beginning of a fiscal year--
            ``(1) to waive the right of the State to receive amounts 
        apportioned or allocated to it under the Federal-aid highway 
        program for the fiscal year to which the election relates; and
            ``(2) to receive instead the amount determined under 
        subsection (e) for that fiscal year.
    ``(c) State Responsibility.--
            ``(1) In general.--The Governor or chief executive officer 
        of a State making an election under subsection (b) shall--
                    ``(A) agree to maintain the Interstate System in 
                accordance with its current Interstate System program;
                    ``(B) submit a plan to the Secretary describing--
                            ``(i) the purposes, projects, and uses to 
                        which amounts received under the direct 
                        Federal-aid highway program will be put; and
                            ``(ii) which programmatic requirements of 
                        this title the State elects to continue;
                    ``(C) agree to obligate or expend amounts received 
                under the direct Federal-aid highway program 
                exclusively for projects that would be eligible for 
                funding under section 133(b) if the State was not 
                participating in the program; and
                    ``(D) agree to report annually to the Secretary on 
                the use of amounts received under the direct Federal-
                aid highway program and to make the report available to 
                the public in an easily accessible format.
            ``(2) No limitation on use of funds.--Except as provided in 
        paragraph (1), the expenditure or obligation of funds received 
        by a State under the direct Federal-aid highway program shall 
        not be subject to regulation under this title (except for this 
        section), title 49, or any other Federal law.
            ``(3) Election irrevocable.--An election under subsection 
        (b) shall be irrevocable during the applicable fiscal year.
    ``(d) Effect on Pre-Existing Commitments.--The making of an 
election under subsection (b) shall not affect any responsibility or 
commitment of the State under this title for any fiscal year with 
respect to--
            ``(1) a project or program funded under this title (other 
        than under this section); or
            ``(2) any project or program funded under this title in any 
        fiscal year for which an election under subsection (b) is not 
        in effect.
    ``(e) Transfers.--
            ``(1) In general.--The amount to be transferred to a State 
        under the direct Federal-aid highway program for a fiscal year 
        shall be the portion of the taxes appropriated to the Highway 
        Trust Fund under section 9503 of the Internal Revenue Code of 
        1986, other than for the Mass Transit Account, for that fiscal 
        year that is attributable to highway users in that State during 
        that fiscal year, reduced by a pro rata share withheld by the 
        Secretary to fund contract authority for programs of the 
        National Highway Traffic Safety Administration and the Federal 
        Motor Carrier Safety Administration.
            ``(2) Transfers.--
                    ``(A) In general.--Transfers under the program--
                            ``(i) shall be made at the same time as 
                        deposits to the Highway Trust Fund are made by 
                        the Secretary of the Treasury; and
                            ``(ii) shall be made on the basis of 
                        estimates by the Secretary, in consultation 
                        with the Secretary of the Treasury, based on 
                        the most recent data available, and proper 
                        adjustments shall be made in amounts 
                        subsequently transferred to the extent prior 
                        estimates were in excess of, or less than, the 
                        amounts required to be transferred.
                    ``(B) Limitation.--An adjustment under subparagraph 
                (A)(ii) to any transfer may not exceed 5 percent of the 
                transferred amount to which the adjustment relates. If 
                the adjustment required under subparagraph (A)(ii) 
                exceeds that percentage, the excess shall be taken into 
                account in making subsequent adjustments under 
                subparagraph (A)(ii).
    ``(f) Application With Other Authority.--There shall be rescinded 
or canceled any contract authority under this chapter (and any 
obligation limitation) for a State for a fiscal year for which an 
election by that State is in effect under subsection (b).
    ``(g) Maintenance of Effort.--
            ``(1) In general.--Not later than 30 days after the date on 
        which an amount is distributed to a State or State agency under 
        the State Highway Flexibility Act or an amendment made by that 
        Act, the Governor or chief executive officer of the State shall 
        certify to the Secretary that the State will maintain the 
        effort of the State with regard to State funding for the types 
        of projects that are funded by the amounts.
            ``(2) Amounts.--As part of the certification, the Governor 
        or chief executive officer shall submit to the Secretary a 
        statement identifying the amount of funds the State plans to 
        expend from State sources during the covered period, for the 
        types of projects that are funded by the amounts.
    ``(h) Treatment of General Revenues.--For purposes of this section, 
any general revenue funds appropriated to the Highway Trust Fund shall 
be transferred to a State under the program in the manner described in 
subsection (e).''.
    (b) Conforming Amendment.--The analysis for title 23, United States 
Code, is amended by inserting after the item relating to section 149 
the following:

``150. Direct Federal-aid highway program.''.

SEC. 3. ALTERNATIVE FUNDING OF PUBLIC TRANSPORTATION PROGRAMS.

    (a) In General.--Chapter 53 of title 49, United States Code, is 
amended by adding at the end the following:
``Sec. 5341. Alternative funding of public transportation programs
    ``(a) Definitions.--In this section--
            ``(1) the term `alternative funding program' means the 
        program established under subsection (c); and
            ``(2) the term `covered programs' means the programs 
        authorized under--
                    ``(A) sections 5305, 5307, 5308, 5309, 5310, 5311, 
                5316, 5317, 5320, 5335, 5339, and 5340 of title 49, 
                United States Code; and
                    ``(B) section 3038 of the Federal Transit Act of 
                1998 (49 U.S.C. 5310 note).
    ``(b) Election by State Not To Participate.--Notwithstanding any 
other provision of law, a State may elect not to participate in a 
Federal program relating to public transportation, including any 
Federal public transportation program under the Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users 
(Public Law 109-59; 119 Stat. 1144), title 23, or this title.
    ``(c) Public Transportation Program.--
            ``(1) Program established.--Beginning in fiscal year 2011, 
        the Secretary shall carry out an alternative funding program 
        under which the Governor or chief executive officer of a State 
        may elect, not fewer than 90 days before the beginning of a 
        fiscal year--
                    ``(A) to waive the right of the State to receive 
                amounts apportioned or allocated to it under the 
                covered programs for the fiscal year to which the 
                election relates; and
                    ``(B) to receive an amount for that fiscal year 
                that is determined in accordance with subsection (e).
            ``(2) Program requirements.--
                    ``(A) In general.--The Governor or chief executive 
                officer of a State that participates in the alternative 
                funding program shall--
                            ``(i) submit a plan to the Secretary 
                        describing--
                                    ``(I) the purposes, projects, and 
                                uses to which amounts received under 
                                the alternative funding program will be 
                                put; and
                                    ``(II) which programmatic 
                                requirements of this title the State 
                                elects to continue;
                            ``(ii) agree to obligate or expend amounts 
                        received under the alternative funding program 
                        exclusively for projects that would be eligible 
                        for funding under the covered programs if the 
                        State was not participating in the alternative 
                        funding program; and
                            ``(iii) submit an annual report to the 
                        Secretary on the use of amounts received under 
                        the alternative funding program, and to make 
                        the report available to the public in an easily 
                        accessible format.
                    ``(B) No limitation on use of funds.--Except as 
                provided in subparagraph (A), the expenditure or 
                obligation of funds received by a State under the 
                alternative funding program shall not be subject to the 
                provisions of this title (except for this section), 
                title 23, or any other Federal law.
            ``(3) Election irrevocable.--An election under paragraph 
        (1) shall be irrevocable during the applicable fiscal year.
    ``(d) Effect on Pre-Existing Commitments.--Participation in the 
alternative funding program shall not affect any responsibility or 
commitment of the State under this title for any fiscal year with 
respect to--
            ``(1) a project or program funded under this title (other 
        than under this section); or
            ``(2) any project or program funded under this title in any 
        fiscal year for which the State elects not to participate in 
        the alternative funding program.
    ``(e) Transfers.--
            ``(1) In general.--The amount to be transferred to a State 
        under the alternative funding program for a fiscal year shall 
        be the portion of the taxes transferred to the Mass Transit 
        Account of the Highway Trust Fund under section 9503(e) of the 
        Internal Revenue Code of 1986, for that fiscal year, that is 
        attributable to highway users in that State during that fiscal 
        year.
            ``(2) Transfers.--
                    ``(A) In general.--Transfers under the program--
                            ``(i) shall be made at the same time as 
                        transfers to the Mass Transit Account of the 
                        Highway Trust Fund are made by the Secretary of 
                        the Treasury; and
                            ``(ii) shall be made on the basis of 
                        estimates by the Secretary, in consultation 
                        with the Secretary of the Treasury, based on 
                        the most recent data available, and proper 
                        adjustments shall be made in amounts 
                        subsequently transferred, to the extent prior 
                        estimates were in excess of, or less than, the 
                        amounts required to be transferred.
                    ``(B) Limitation.--An adjustment under subparagraph 
                (A)(ii) to any transfer may not exceed 5 percent of the 
                transferred amount to which the adjustment relates. If 
                the adjustment required under subparagraph (A)(ii) 
                exceeds that percentage, the excess shall be taken into 
                account in making subsequent adjustments under 
                subparagraph (A)(ii).
    ``(f) Contract Authority.--There shall be rescinded or canceled any 
contract authority under this chapter (and any obligation limitation) 
for a State for a fiscal year for which the State elects to participate 
in the alternative funding program.
    ``(g) Maintenance of Effort.--
            ``(1) In general.--Not later than 30 days after the date on 
        which an amount is distributed to a State or State agency under 
        the State Highway Flexibility Act or an amendment made by that 
        Act, the Governor or chief executive officer of the State shall 
        certify to the Secretary that the State will maintain the 
        effort of the State with regard to State funding for the types 
        of projects that are funded by the amounts.
            ``(2) Amounts.--The certification under paragraph (1) shall 
        include a statement identifying the amount of funds the State 
        plans to expend from State sources for projects funded under 
        the alternative funding program, during the fiscal year for 
        which the State elects to participate in the alternative 
        funding program.
    ``(h) Treatment of General Revenues.--For purposes of this section, 
any general revenue funds appropriated to the Highway Trust Fund shall 
be transferred to a State under the program in the manner described in 
subsection (e).''.
    (b) Conforming Amendment.--The analysis for title 49, United States 
Code, is amended by inserting after the item relating to section 5340 
the following:

``5341. Alternative funding of public transportation programs.''.

Summary: State Highway Flexibility Act - Allows a state to elect not to participate in the federal-aid highway program, including any federal highway program under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Directs the Secretary of Transportation (DOT), beginning in FY2011, to carry out a direct federal-aid highway program to permit a state governor or chief executive officer, at least 90 days before the beginning of a fiscal year, to elect to: (1) waive the state's right to receive apportioned or allocated funds under the federal-aid highway program, and (2) receive instead a prorated amount of taxes appropriated to the Highway Trust Fund which are attributable to highway users in the state. Requires a pro rata reduction of such tax-equivalent amount in order to fund contract authority for programs of the National Highway Traffic Safety Administration (NHTSA) and the Federal Motor Carrier Safety Administration (FMCSA). Requires the state governor or chief executive officer making an election to: (1) agree to maintain the Interstate System in accordance with its current Interstate System program. (2) submit a plan describing the purposes, projects, and uses to which such amounts will be put and the federal-aid highway programmatic requirements the state elects to continue. And (3) agree to obligate program amounts exclusively for projects that would be eligible for surface transportation program funding. Directs the Secretary to carry out a similar alternative funding program for public transportation programs.