To reduce the amount of obligation authority available to certain States for Federal-aid highways and highway safety construction programs for fiscal year 1991 if the laws of those States do not provide for the establishment of a dedicated tax-based source of revenues for funding mass transit projects by January 1, 1992, and for other purposes.

Requires the Secretary of Transportation to reduce by 25 percent the aggregate amount which a mass transit State may obligate for Federal-aid highways and highway safety construction programs for FY 1991 if by October 1, 1990, laws of such State do not authorize: (1) a general tax-based source of revenue to take effect by January 1, 1992, for paying the non-Federal share of projects for mass transportation eligible for assistance under the Urban Mass Transportation Act of 1964; or (2) the establishment of regional or local tax-based sources of revenues to pay such non-Federal share or to pay operating expenses of mass transit service which satisfy financial capacity standards.

Authorizes the Secretary to restore any reductions in obligation authority made to a mass transit State in FY 1991 if such State complies with this Act by July 1, 1991.