(a) General rule.--The department and the affected municipality shall jointly determine whether any rehabilitative work is required to put the highway or road in a satisfactory condition. The rehabilitative work may be done by department or municipal forces, or by contract, as the parties shall agree. If the work is to be performed by the department or its contractors, the highway or road transfer shall not be effective until all agreed upon rehabilitative work has been completed.

(b) Funding.--All restoration work shall be paid from the State Highway Transfer Restoration Restricted Account within the Motor License Fund, provided, however, that the department may in its discretion pay for any or all such work to be performed by the department or its contractors from funds made available to the county maintenance districts under section 9102 (relating to distribution of State highway maintenance funds). No funds shall be allocated to municipalities for the maintenance of highways transferred under this chapter out of section 4 of the act of June 1, 1956 (1955 P.L. 1944, No. 655),¹ referred to as the Liquid Fuels Tax Municipal Allocation Law, nor shall highways transferred under the provisions of this chapter be used to compute or determine the allocations of municipalities under that section.

(c) Public liability.--Upon transfer of any highway, the municipality shall assume the same public liability for the transferred highway as it assumes for other highways under municipal jurisdiction.