Although it received only passing notice in President Bush's State of the Union address, legislation that would set national highway and transit priorities into the next century promises to spark one of the year's most significant budget battles.

Behind Bush's mention of "a blueprint for a new national highway system" is a proposal to boost federal highway and mass-transit funding to nearly $90 billion over the next five years while requiring states to spend more in matching funds, according to transportation industry and government sources.

The new Surface Transportation Act, the administration's attempt to take America beyond the era of Interstate highways, also will contain a proposal to increase federal spending on mass-transit construction by 2 percent in 1992 to $3.3 billion. This is the first time the executive branch has proposed an increase in mass-transit funding since President Jimmy Carter did so a decade ago.

The proposal, to be outlined in the fiscal 1992 budget Monday, would concentrate on an effort to slow deterioration of bridges and highways and expand the system selectively.

It essentially would use increased federal funds to leverage more money from states. In return, states would be given more flexibility in spending federal funds.

A large chunk of highway funds could be used for transit, and all transit funds could be shifted to highways, although there would be tight restrictions to ascertain that various projects are competing for the funds "on a level playing field," as one official put it.

The plan is certain to produce controversy, particularly among states that have large land areas and small populations and already complain that the plan is likely to shortchange them. Sources said that every state will receive more federal money each year but that some will see a slight decrease in the percentage of their allocation in relation to other states.

Congressional Democrats have served notice that, while they agree with many of the principles of the plan, major revisions are likely.

Rep. Robert A. Roe (D-N.J.), incoming chairman of the House Public Works and Transportation Committee, told a meeting of mayors last week that he and House Speaker Thomas S. Foley (D-Wash.) had agreed that Congress must produce a "countercyclical" bill to stimulate the economy, indicating that Democrats will push for a larger bill.

Roe also said he will work for more mass-transit money. The transit industry says it should get enough to make up for inflation since cutbacks began in the Reagan years -- about $6.5 billion.

The Transportation Department and the White House Office of Management and Budget have worked out all but a few minor details in the legislation, a version of an original draft circulated to various pressure groups for comment several weeks ago.

Federal highway obligations have increased from $13.8 billion in fiscal 1990 to a little more than $16 billion in fiscal 1991. Under the administration bill, funding from fiscal 1992 through fiscal 1996 would rise gradually to about $20 billion. These funds would come from the current 11.5-cents-per-gallon federal gasoline tax, through the highway trust fund.

The bill would establish a 150,000-mile system of "highways of national significance" that would include the Interstate highway system, with a 75-to-25 federal-to-state matching ratio for construction and improvement. The Interstate system, nearing completion after more than 30 years, was built with a 90 percent federal share.

The few remaining segments of the Interstate system would be finished with 90 percent federal funds, although states would have only one more chance to revise upward the estimated cost of completion -- in 1994. Under the Interstate program, the federal share has been based on "cost to completion," whatever the final cost. After 1994, states would have to swallow additional cost.

One major 90 percent federal matching program would remain -- the "4-R" program of Interstate resurfacing, restoration, rehabilitation and reconstruction. "Operator enhancement" programs such as installation of intelligent-vehicle programs also would be eligible for 90 percent funds.

A 700,000-mile "urban-rural" system would be designated, with 60 percent federal money, the same ratio as the mass-transit construction funding. Both programs would be interchangeable, although states would have to prove that the decision to shift money between a highway or transit project was based on careful local planning.

As much as 15 percent of funds for "highways of national significance" could be switched to transit, although at the lower 60-to-40 ratio.

Much controversy is expected about the formula for allocating funds to states -- based 70 percent on federal gas tax revenues collected in that state, 15 percent on land area and 15 percent on lane-miles of highway. Large but sparsely populated states such as Nevada and Montana say such a formula would punish them because they have many miles of two-lane road and small populations.

Increases in truck weight or size are not mentioned in the bill, although that subject may produce battles in Congress.