A bill to amend the State and Local Fiscal Assistance Act of 1972 to provide a 5-year extension of the general revenue sharing program and to provide that each State make an annual election to receive its State government allocation or the equivalent amount in specific categorical grant programs, but not both.

Amends the State and Local Fiscal Assistance Act of 1972 to authorize appropriations to the State and Local Government Fiscal Assistance Trust Fund for the entitlement periods of each of fiscal years 1981 through 1985. Reduces by one-third the funds authorized to be provided for such entitlement periods.

Directs the Secretary of the Treasury to establish within the Trust Fund a State government account and a local government account for entitlement periods beginning after September 30, 1980. Declares that the State account shall receive only funds transferred from categorical grant programs.

Prohibits the amount credited to the State account for a specific State for any entitlement period from exceeding one-half the amount credited to the local government account for all local governments within such State for that period.

Declares that the amount a State government is entitled to receive from the Trust Fund for any entitlement period beginning after September 30, 1980, shall not exceed the amount of the categorical grant funding reduction elected by that State for that entitlement period.

Sets forth the procedures for the designation, by the chief executive officer of a State, of the categorical grant programs under such State's allotments which are to be transferred to the State account of the Trust Fund. Requires a majority of the chief executive officers of States involved in a single project under a program to designate the transfer of funds for such program before such transfer may occur. Directs the Secretary to transfer any such designated program funds to the State government account.

Declares that such a transfer of funds allotted to a State under a program shall constitute a payment to that State for purposes of provisions of law providing for the reallotment of amounts not paid under the program to a State.