Surface Transportation and Transit Empowerment Act

Surface Transportation and Transit Empowerment Act - Empowers States with authority for most taxing and spending for highway programs and mass transit programs.

Makes each electing State eligible for a core highway programs payment and a non-core highway programs block grant in lieu of any other payment from the Highway Account and the Future Highway Investment Sub Account of the Future Investment Account (established by this Act). Designates as core highway programs: (1) the interstate maintenance program; (2) highway bridge replacement and rehabilitation (excluding off-System bridges); (3) Indian reservation roads; (4) public lands highways; (5) parkways and park roads; (6) highway safety programs; (7) highway safety research and development; (8) motor carrier safety grants; (9) metropolitan planning; (10) national defense highways; and (11) emergency relief.

(Sec. 3) Sets forth requirements for determination and use of core highway programs payments, and non-core highway programs block grants, during FY 1998 through 2003.

Allows a core program State (tier I, eligible for a core highway programs payment and a non-core highway programs block grant) to notify the Secretary of Transportation (the Secretary) of its election to become a tier II core program State (eligible for a core highway programs payment, but electing to reduce its Federal fuel tax rate with a corresponding reduction in its non-core highway programs block grant). Makes a tier II election also an election to have imposed on highway users in the State the State's core highway programs financing rate with respect to the taxes transferred to the Highway Account and the Future Highway Investment Sub Account of the Future Investment Account which are attributable to such highway users in lieu of the tax rates otherwise established in the Internal Revenue Code for fiscal years beginning after the satisfaction year (during which the State has paid specified program obligations) and ending with the termination of the election period.

Directs the Secretary of the Treasury to determine such a State's core highway programs financing rate, taking specified factors into account. Requires congressional approval of such rate by a joint resolution.

(Sec. 4) Allows a core program State or any other State to notify the Secretary of an election to receive with respect to each fiscal year during the State's election period a mass transit block grant, in lieu of any other payment from the Mass Transit Account and the Future Transit Investment Sub Account of the Future Investment Account. Provides that such an election shall not affect a State's continued eligibility for revenues provided through the general fund of the Treasury for transit programs.

Sets forth requirements for determination and use of the mass transit block grant.

Allows a mass transit State (tier I, eligible for a mass transit block grant) to notify the Secretary of its election to become a tier II mass transit State (eliminating its mass transit fuel tax rate with a corresponding elimination of its mass transit block grant). Directs the Secretary of the Treasury to notify specified congressional committees of a State's election to eliminate the mass transit fuel tax rate. Requires congressional approval of such an election by a joint resolution.

(Sec. 5) Requires deduction of the amount of any improperly used funds from any amount a State would otherwise receive from the Highway Account for the fiscal year that begins after determination that a core program State or mass transit State has used funds under this Act for any non-surface transportation purpose.

(Sec. 7) Grants congressional consent to States to enter into interstate compacts to: (1) promote the continuity, quality, and safety of the Interstate System; (2) develop programs to promote and fund surface transportation safety initiatives and establish surface transportation safety standards; (3) conduct long-term planning for surface transportation infrastructure in participating States, and develop design and construction standards for it; and (4) establish surface transportation infrastructure banks, which shall make loans and provide other assistance to public or private entities for surface transportation projects.

(Sec. 8) Requires the head of each executive agency to: (1) assist State and local governments in efforts to privatize their transportation infrastructure assets; and (2) approve requests from State and local governments to privatize such assets and waive or modify any condition relating to the original Federal program that funded them.

Sets forth criteria for approval of such requests. Declares that a State or local government shall have no obligation to repay Federal grant funds for assets that are privatized. Authorizes State and local governments to recover the capital investment and specified costs from the privatization of an asset.

(Sec. 9) Amends Internal Revenue Code (as amended by the Taxpayer Relief Act of 1997) to establish in the Highway Trust Fund a separate Future Investment Account, with a Future Highway Investment Sub Account and a Future Transit Investment Sub Account, for funding highway and transit programs under this Act.

(Sec. 10) Declares that this Act shall take effect only upon certification by the Director of the Office of Management and Budget that it is deficit neutral and meets specified requirements regarding discretionary spending limits.