Authority: Title 2.1, Chapter 5.10 and § 2.1-51.10:l, Code of Virginia.

A.1. The Commonwealth Transportation Board is hereby authorized to enter into project agreements with the United States Government to secure the maximum level of federal funding for transportation programs in the Commonwealth, including agreements that provide for the allocation of funds necessary to comply with federal law but which may differ from formulae provided in the Code of Virginia in the following areas:

a. Funds apportioned under federal law for the Interstate System and the National Highway System shall be treated, for state formulae matching purposes, as interstate funds, pursuant to § 33.1-23.1, Code of Virginia; except that the Commonwealth Transportation Board is authorized to transfer amounts that may be necessary to maintain allocations to the primary, secondary and urban systems as set out in § 33.1-23.1 on a consistent basis.

b. Funds apportioned under federal law for congestion mitigation and air quality improvement shall be allocated to designated projects in clean air nonattainment and maintenance areas of the Commonwealth in addition to funds allocated to these areas pursuant to § 33.1-23.1, Code of Virginia.

c. Funds apportioned under federal law for the Surface Transportation Program shall be distributed and administered in accordance with federal requirements, as follows:

d.1) Ten percent shall be set aside for a statewide enhancement program less the amounts allowed for transfer to the state primary, secondary and urban systems as set out in § 33.1-23.1, with grants made to projects across the state. The amount set aside each year may be adjusted to correspond to revised federal apportionment estimates.

2) Ten percent shall be set aside for a statewide safety program with grants made to projects across the state. The amount set aside each year may be adjusted to correspond to revised federal apportionment estimates.

3) Fifty percent shall be allocated on the basis of population, as prescribed by federal law; and

4) Twenty-four percent shall be allocated pursuant to § 33.1-23.1 of the Code of Virginia.

5) Six percent shall be allocated for public transit purposes.

e. Funds apportioned under federal law for the Minimum Guarantee Equity program and the Bridge Replacement and Rehabilitation program shall be allocated as required by federal law and through the state allocation formula set out in § 33.1-23.1, except for those Minimum Guarantee funds allocated to eligible projects at the discretion of the Commonwealth Transportation Board. Ten percent of Minimum Guarantee funding shall be allocated to transit projects. After each action to allocate funds under this provision, the Commonwealth Transportation Board shall submit to the House Appropriations and Senate Finance Committees a list of such approved discretionary projects and the rationale for such approval.

f. Funds allocated pursuant to § 33.1-23.1 B 2 and B 3, Code of Virginia, may be utilized on any project eligible under Title 23, United States Code, Section 133, upon request of the local governing body and approval of the Commonwealth Transportation Board.

g. The required matching funds for the Congressionally-designated High Priority projects are to be provided by the mode, system or recipient of the federal-aid funding.

h. Federal funds provided to the National Highway System, Surface Transportation Program, Minimum Guarantee Program and Congestion Mitigation and Air Quality categories as well as the required State matching funds may be allocated by the Commonwealth Transportation Board for transit purposes under the same rules and conditions authorized by federal law. The Commonwealth Transportation Board, in consultation with the appropriate local and regional entities, may allocate to local and regional public transit operators, for operating and/or capital purposes, state revenues designated by formula for primary, urban, and secondary highways.

2. The Commonwealth Transportation Board is hereby directed to continue its efforts to secure additional federal transportation funding from the TEA-21 discretionary and transit programs and through the annual federal appropriations processes to further the Commonwealth's transportation objectives.

B. The Secretary of Transportation and the Commissioner of the Department of Motor Vehicles shall report to the Chairmen of the Senate Finance and House Appropriations Committees by November 1 of each year on the actual and projected disbursements under the Commonwealth's Personal Property Tax Relief (PPTR) program. Such report shall include the actual reimbursements by locality from the program through the most recent fiscal year, its variance from the official estimate, and the projected disbursements by locality for the upcoming two fiscal years. In addition, the report also shall include the methodology used in developing the projection for the upcoming two fiscal years and such other data as may be requested.

C. Notwithstanding the provisions of § 58.1-638 of the Code of Virginia, the sales and use tax revenue for the fiscal year 2003, beginning July 1, 2002 and ending June 30 2003, and the fiscal year 2004, beginning July 1, 2003 and ending June 30, 2004, generated by the one-half percent sales and use tax increase enacted by the 1986 Special Session of the General Assembly shall be paid into the general fund of the state treasury, excluding the payments required to be made to the Commonwealth Port Fund, the Commonwealth Airport Fund and the Commonwealth Mass Transit Fund.