Amends TCA Title 54.

This bill requires the department of transportation ("department") to award money from the state highway fund to local public agencies in exchange for federal aid obligation authority allocated to local agency projects as provided in this bill, if allowed by federal law and regulations. This bill authorizes local public agencies to apply for state money in exchange for 100 percent of the federal aid obligation authority allocated by the department to a local public agency project, in the manner and on the schedule determined by the department. The department must develop and publish guidance to assist local public agencies in applying for the transportation fund exchange program. If applications are received that request more state money than is available to be exchanged in a fiscal year, then awards must be made in the order received. This bill requires state money to be exchanged with local public agencies for federal aid obligation authority in an amount equal to or less than 90 cents per dollar of all federal aid obligation authority allocated in the approved transportation improvement plan to each project for which authority is exchanged. The department must pay state money exchanged for federal aid obligation authority to local public agencies when sufficient federal aid obligation authority is received from the federal highway administration to cover the exchanges, not including any year-end redistributions. This bill provides that the first priority for the use of state money exchanged for federal aid obligation authority must be the local public agency project for which the federal aid obligation authority was originally proposed. If the state money exchanged for federal aid obligation authority exceeds the cost of the original project, then any surplus must be applied to federal aid eligible projects by the local public agency or returned to the department. This bill further provides that state money exchanged for federal aid obligation authority must be expended not later than three years after the exchange. If the project for which federal aid obligation authority was exchanged cannot be completed within three years, then the local public agency must notify the department and identify an alternate project eligible for federal aid that can be constructed within the original three-year period, or return the money to the department. This bill requires the department to promulgate rules, including emergency rules, to effectuate this bill.