SECTION 1. FINDINGS.

    The Congress finds the following:
            (1) The President has proposed a multibillion dollar 
        reconstruction project for Iraq.
            (2) The President's plan includes resources to rebuild 
        potable water and wastewater treatment facilities; schools and 
        health facilities; ports and airports; the electric power 
        system, roads, and bridges; railroad infrastructure; solid 
        waste management services; irrigation systems; and selected 
        local government buildings.
            (3) State and local governments in the United States have 
        their own unmet infrastructure and social services needs.
            (4) State and local governments represent a significant 
        segment of the national economy whose economic health is 
        essential to national economic prosperity.
            (5) Present national economic problems have imposed 
        considerable hardships on State and local government budgets.
            (6) Those governments, because of their own fiscal 
        difficulties, are being forced to take budget-related actions 
        which tend to undermine Federal Government efforts to stimulate 
        the economy.
            (7) Efforts to stimulate the economy through reductions in 
        Federal Government tax obligations or increased spending on 
        Federal programs are weakened when State and local governments 
        are forced to increase taxes or cut spending.
            (8) Efforts by the Federal Government to stimulate the 
        economic recovery will be substantially enhanced by a program 
        of emergency Federal Government assistance to State and local 
        governments to help prevent those governments from taking 
        budget-related actions which undermine the Federal Government 
        efforts to stimulate economic recovery.
            (9) State and local governments deserve, at a minimum, the 
        same level of Federal investment to address infrastructure and 
        social services shortfalls as the amount of relief and 
        reconstruction funds provided to Iraq.

SEC. 2. FINANCIAL ASSISTANCE AUTHORIZED.

    (a) Payments to State and Local Governments.--The Secretary of the 
Treasury shall, in accordance with the provisions of this Act, make 
payments to States and local governments to coordinate budget-related 
actions by such governments with Federal Government efforts to 
stimulate economic recovery.
    (b) Authorization of Appropriation.--There is authorized to be 
appropriated to the Secretary of the Treasury for fiscal year 2003 for 
payments under this Act an amount equal to at least the total amount 
appropriated for fiscal year 2003 under the heading ``Iraq Relief and 
Reconstruction Fund'' in the Emergency Wartime Supplemental 
Appropriations Act, 2003, and any amounts appropriated for such Fund in 
any subsequent appropriation Act. Such amounts shall be in addition to, 
and not in lieu of, other amounts appropriated for payments to States 
and local governments.
    (c) Availability to Local Governments.--Not less than one-third of 
the amount appropriated pursuant to the authorization in subsection (b) 
shall be made available to local governments under the applicable laws 
of a given State.

SEC. 3. ALLOCATION.

    The Secretary of the Treasury shall establish a formula, within 30 
days after the date of the enactment of this Act, for determining the 
allocation of payments under this Act. The formula shall give priority 
weight to the following factors:
            (1) The unemployment rate in relation to the national 
        average unemployment rate.
            (2) The duration of the unemployment rate above such 
        average.
            (3) Median income.
            (4) Population.
            (5) The poverty rate.

SEC. 4. USE OF FUNDS BY STATE AND LOCAL GOVERNMENTS.

    (a) In General.--Funds received under this Act may be used only for 
priority expenditures. For purposes of this Act, the term ``priority 
expenditures'' means only--
            (1) ordinary and necessary maintenance and operating 
        expenses for--
                    (A) primary, secondary, or higher education, 
                including school building renovation;
                    (B) public safety;
                    (C) public health, including hospitals and public 
                health laboratories;
                    (D) social services for the disadvantaged or aged;
                    (E) roads, transportation, and water 
                infrastructure; and
                    (F) housing; and
            (2) ordinary and necessary capital expenditures authorized 
        by law.
    (b) Certifications by State and Local Governments.--The Secretary 
of the Treasury may accept a certification by the chief executive 
officer of a State or local government that the State or local 
government has used the funds received by it under this Act only for 
priority expenditures, unless the Secretary determines that such 
certification is not sufficiently reliable to enable the Secretary to 
carry out this Act. The Secretary shall prescribe by rule the time and 
manner in which the certification must be filed.
Output: Directs the Secretary of the Treasury to make payments to States and local governments to coordinate their budget-related actions with Federal Government efforts to stimulate the economy. Authorizes appropriations for FY 2003 for such payments in an amount equal to the total amount appropriated for for FY 2003 for the Iraq Relief and Reconstruction Fund in the Emergency Wartime Supplemental Appropriations Act, 2003, and subsequent appropriations Acts. Requires not less than one-third of such amount to be made available to local governments. Requires the Secretary to establish a formula for determining the allocation of payments, with priority consideration to the relative unemployment rate, median income, population, and poverty rate. Permits the use of funds received by States and local governments only for: (1) ordinary and necessary maintenance and operating expenses for education, public safety, public health, social services, roads, transportation, water infrastructure, and housing; and (2) ordinary and necessary capital expenditures authorized by law.