After years without a federal transportation funding bill, Congress appears to be on the verge of a breakthrough.

Increased flexilbility for the states means dollars may be diverted away from sidewalks and bike lanes to roads.On Wednesday evening, key members of congress said they had reached an agreement, just three days before the current stop-gap transportation funding bill expires on June 30.

The new two-year bill would provide $8.4 billion per year, primarily for highways. It also includes allocates federal transportation dollars to local street safety projects like bike lanes, sidewalks and crosswalks.

But, as StreetsBlog notes, that part of the program has morphed into a much more general fund for anything that can be considered an air quality improvement strategy. States have great leeway to shift funds around, and bike and pedestiran projects will have to compete with road projects and much more.

All told, the funding for the Transportation Enhancements program goes from $1.2 billion in FY 2011 to around $750 million under the new bill - a drop of more than 40 percent. Some environmental provisions were also cut from the final bill.

The enhancements fund was a sticking point in negotiations. Democrats had sought a more robust program, but scaled back in exchange for Republican agreement to drop the completely unrelated Keystone Pipline from the legislation.

You can find out more about the new legislation on The Hill and CNBC.