In practical terms this is like saying "you're welcome to decline food". Part of the argument for limiting federal government in the first place is to prevent this kind of arm twisting.
And that's true. Federal road funding for highways comes with some specific regulations and conditions, on signage, minimum bridge heights, etc. To extend the food analogy, if someone's gifting you free food, it's probably a bit rude to complain you don't like the parsley garnish.
Trump poked the bear with this one by trying to withhold unrelated federal funding to sanctuary cities and Obama got made folks really mad when he tried it with the ACA.
This would be an even bigger waste than that, given the relatively small condition being applied, but opting out for ideological reasons is clearly doable.
And with this court who has an axe to grind with expansion of federal power I expect the bar is much lower now.