The Commissioner of Transportation shall establish a matching grant program for the purpose of assisting municipalities to modernize existing traffic signal equipment and operations to make such equipment and operations capable of utilizing transit signal priority and responsive to congestion and to reduce idling. Applications shall be submitted annually to the commissioner at such times and in such manner as the commissioner prescribes. The commissioner shall develop the eligibility criteria for participation in the program and determine the amount a municipality shall be required to provide to match any such grant. The commissioner shall give preference to applications submitted by two or more municipalities and establish incentives for projects undertaken by two or more municipalities.