SECTION 1.  Clause (2) of the first paragraph of section 34 of chapter 90 of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by striking out the introductory paragraph and subdivision (a) and inserting in place thereof the following:-

Not less than 90 per cent of the balance then remaining shall be used exclusively-

(a) For expenditure, under the direction of the department, for maintaining, repairing, improving and constructing town and county ways and bridges, sidewalks adjacent to the ways and bridges, bikeways and for design and engineering expenses, together with any money which any town or county may appropriate for such purposes.  The ways, bridges, bikeways and sidewalks shall remain town and county ways, bridges, bikeways and sidewalks.  The remaining 10 per cent of the balance may be used in a manner and for the purposes described above or may be used for expenditures, under the direction and approval of the department, for other projects eligible for funding as a transportation enhancement project as described in the Intermodal Surface Transportation Efficiency Act of 1991, P.L. 102-240, salt storage sheds, public use off-street parking facilities related to mass transportation, expenses related to highway transportation enhancement and mass transportation purposes, for care, repair, storage, replacement, purchase and long-term leasing of road building machinery, equipment and tools, for the erection and maintenance of direction signs and warning signs and for necessary or beneficial improvements to unpaved town and county ways together with any money which a town or county may appropriate for such purposes to be used on the same ways, sheds, bikeways, bridges, machinery, equipment, tools and facilities.  The department shall send written notification to each town advising of the funds apportioned to said town for eligible projects no later than April 1 of each year.  Each town shall submit to the members of the general court a written plan outlining the projects for which such funds shall be applied no later than April 15 of each year, and further, each town shall submit to the members of the general court a written report explaining how funds authorized pursuant to this chapter were spent and advising as to the amount, if any, of any unexpended funds no later than December 15 of each year.  No revenue credited to the Highway Fund shall be transferred from said fund to any other fund for any other purpose; provided, however, that such revenue shall be transferred in order to cover fringe benefit costs pursuant to section 5D or subsection (f) of section 6B of chapter 29.  The department shall withhold or withdraw the unexpended balance of any funds assigned by it under this subdivision if a town fails to comply with the official standards for traffic control established by the department or with any traffic control agreement negotiated between the department and a town, as required by the United States Secretary of Commerce under 23 U.S.C. 109.  In this subdivision, the word “town” shall include city; provided, that towns with a population of less than 10,000 persons according to the 2000 United States Census shall be allowed to petition said department for a waiver in the department’s discretion from the percentage limitation.