(1)    The department may designate, or rescind the designation of, certain marked routes of the state trunk highway system over the streets or highways in any municipality for which the municipality will be responsible for maintenance and traffic control and the maintenance and operation of any swing or lift bridge. Such maintenance, operation and traffic control of the connecting highways and swing and lift bridges shall be subject to review and approval by the department. Those marked routes of the state trunk highway system designated as connecting streets prior to July 1, 1977, shall become the connecting highways in municipalities which are eligible for aids payments under this section. The character of travel service provided by a route, uniformity of maintenance, the effect on the maintaining agency, and the municipality’s maintenance capability will be considerations by the secretary, in cooperation with the municipalities and counties in making changes in the connecting highways of the state trunk highway system in municipalities. The decision of the secretary to designate or rescind a designation may be appealed to the division of hearings and appeals, which may affirm, reverse or modify the secretary’s decision.

   (2)   

      (a)    Cities, villages and towns shall be reimbursed for actual costs, as approved by the department, incurred in maintaining and operating lift bridges. Documentation of costs shall be submitted by each city, village and town by January 31 and reimbursement shall be made, starting in 1982-83, on the first Monday in July for costs incurred during the prior calendar year. If the amount appropriated under s. 20.395 (1) (ft) is insufficient to pay the actual costs approved by the department for the maintenance and operation of lift bridges, the department shall prorate the amount appropriated in the manner it deems desirable.

      (am)    Reimbursement for maintenance of connecting highways shall be determined using the following rates per lane mile:

         7.    For 1995,1996 and 1997, $10,468 per lane mile for municipalities having a population over 500,000; $9,696 per lane mile for municipalities having a population of 150,001 to 500,000; $8,641 per lane mile for municipalities having a population of 35,001 to 150,000; $7,612 per lane mile for municipalities having a population of 10,000 to 35,000; and $6,558 per lane mile for municipalities having a population under 10,000.

         8.    For 1998 and thereafter, $11,724 per lane mile for municipalities having a population over 500,000; $10,860 per lane mile for municipalities having a population of 150,001 to 500,000; $9,678 per lane mile for municipalities having a population of 35,001 to 150,000; $8,525 per lane mile for municipalities having a population of 10,000 to 35,000; and $7,345 per lane mile for municipalities having a population under 10,000.

      (b)   

         1.    For the first 2 lanes of a highway, the applicable rate per lane mile shall be paid in full. For the 2nd 2 lanes of a highway, the payable rate per lane mile shall be 75 percent of the appropriate rate per lane mile prescribed in this section. For the 3rd 2 lanes, and any additional lanes, of highway, the payable rate per lane mile shall be 50 percent of the appropriate rate per lane mile prescribed in this section.

         2.    For the purpose of this section, the term “lane miles” means miles of through traffic carrying lanes and does not include lanes on which parking is permitted. Lane miles on any section of connecting highway which have been certified by the department for payment purposes under this section shall not be increased unless they are needed for through traffic and approved by the department. The “lane miles” as of January 1, 1977, are the certified lane miles.

         3.    The amount appropriated under s. 20.395 (1) (fq) shall be distributed according to the per lane mile rate established in this subsection.

         4.    Annual connecting highway aids shall be paid in 4 installments on the first Monday in July, October, January and April. Unless fiscal year adjustments are necessary, the July and October installments shall equal the January and April installments of the previous fiscal year. If fiscal year adjustments are necessary, the department shall make these fiscal year adjustments in the July installment. If a fiscal year adjustment is made in the July installment, the next subsequent October installment shall equal the average of the most recent January, April and July installments.

         5.    If the amount appropriated under s. 20.395 (1) (fq) is insufficient to make the payments for lane mile reimbursement under this subsection, the department shall prorate the amount appropriated in the manner it deems desirable.

   (4)   Municipalities may arrange to participate in the cost of improvement projects on connecting highways. When a connecting highway is reconstructed the municipality shall be required to pay to the department the construction cost of that part of the connecting highway on which parking is to be permitted. However, if lanes on which parking is permitted are required for through traffic and parking is no longer allowed, the department shall reimburse the municipality for the remaining life of those lanes based on a pavement life of 25 years and the original municipal cost for the lanes.