Whenever, under any law of this Commonwealth, a county and a borough, or a county and a township, may enter into a contract with the State Highway Department for the construction or improvement of a State or State-aid highway, such county may contract with the State Highway Department to pay the whole or such part of the cost thereof as is not paid by the Commonwealth. The county and the borough or the township where such improvements are made may contract for the reimbursement to the county, by the borough or township, of a part of the cost for which the county has contracted with the State Highway Department, under such terms as may be mutually agreed on.