(a) The commissioner may enter into agreements for the acceptance and expenditure of funds concerning federal surface transportation urban program roadways or facilities and eligible federal surface transportation rural collector roadways or facilities with the United States Secretary of Transportation or local officials, or both, to develop plans and establish programs for, and construct improvements on or to such roadways or facilities using appropriations made to the Department of Transportation by the General Assembly and apportionments to the Department of Transportation by said Secretary of Transportation under the provisions of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), all amendments thereto and all applicable federal regulations. Any municipality becoming a party to an agreement concerning such improvements on locally maintained roadways or facilities shall pay fifty per cent of that portion of the cost thereof, which is not paid by the federal government, including required studies, establishing programs, development of plans, engineering expenses, acquisition of rights-of-way, required municipally-owned utility work and construction activities, provided the municipality may pay up to the entire nonfederal government share on locally maintained roadways or facilities when the commissioner and municipality agree that this action is warranted, necessary and desirable in order to obtain federal funds. The state may pay fifty per cent of that portion of the cost thereof which is not paid by the federal government on locally maintained roadways or facilities and shall pay the entire portion not paid by the federal government on state maintained roadways or facilities.

(b) For locally maintained roadways or facilities, the commissioner and the municipality may agree upon alternate funding percentages.