(1) Except as provided in subsection (2), the state transportation commission by resolution may authorize any city or village to issue on behalf of the state the permits required by this act with respect to state trunk line highways within the corporate limits of the city or village provided the permits are issued pursuant to this act and rules promulgated under this act, subject to conditions as the commission may prescribe and subject to acceptance of that authority by the governing body of the city or village.

  (2) A permit issued by a city under the city motor vehicle racing act of 1981 shall be considered to be a permit issued for all purposes under this act regarding any highway located within the limits of the city.