This Act may be cited as the Transit Funding Flexibility Act.

Section 5307 of title 49, United States Code, is amended— (1) in subsection (a)— (A) in paragraph (1)(D) by striking in an urbanized area with a population of fewer than 200,000 individuals, as determined by the Bureau of the Census; and (B) by striking paragraphs (2) and (3); (2) in subsection (c)— (A) in paragraph (1)(L) by striking and at the end; (B) in paragraph (2) by striking the certification and inserting each certification; (C) by redesignating paragraph (2) as paragraph (3); and (D) by inserting before paragraph (3), as so redesignated, the following new paragraph: (2) the recipient, not later than the 30th day of the first full fiscal year after a recipient first receives grant funds under this section and each fiscal year thereafter, shall submit to the Secretary a certification that, for the fiscal year, the recipient will maintain effort with respect to any operating costs of equipment and facilities for which grant funds are used; and; and (3) in subsection (f)(3)— (A) by striking The Secretary may and inserting (A) In general.— Subject to subparagraph (B), the Secretary may; and (B) by adding at the end the following new subparagraph: (B) Failure to maintain effort If, in conducting a review, audit, and evaluation under this subsection, the Secretary finds that a recipient failed to maintain effort during a fiscal year as certified to under subsection (c)(2), the Secretary shall reduce by 1/3 any amount such recipient is to receive under this section in the next fiscal year..