Why are local potholes a federal problem anyway? California taxpayers can pay for California's roads and potholes, Nevada can pay for Nevada's, Ohio for Ohio's, etc. There is nothing positive about sending a big stack of money to Washington, having some if it skimmed off by the federales and the leftovers returned to you (unless you live in West Virginia and have a highway, street or goat path named after Sen. Byrd.)
I believe those are California transportation funds that are being withheld - the result of a 65-cent a gallon gas tax and $4 bridge tolls in the Bay Area.