(a) On behalf of the state or any agency thereof, to apply to any appropriate agency or officer of the federal government for participation in or the receipt of federal aid pursuant to such federal act, and to make such agreements with the federal government or any appropriate agency or officer thereof, not inconsistent with law, as may be necessary as a condition precedent to receiving such federal aid for a project, provided that the office shall not make a commitment or enter into any agreement pursuant to this paragraph until the director of the budget certifies that sufficient funds are available for meeting the state share, if any, of the cost of the project.

(b) On behalf of any municipality eligible under federal law or regulation, to enter into and administer such agreements with the federal government or any appropriate agency or officer thereof as may be necessary as a condition precedent for receiving such federal aid for a project, provided that such municipality give necessary assurances to the office, in the form of a written agreement, that such municipality has available sufficient funds to meet its share of the cost of the project, and that the project will be operated and maintained at its expense for the required public use. 3. Custody and payment of funds. (a) The department of taxation and finance is hereby designated as the custodian of all federal funds allotted to the state pursuant to such federal act, and such funds shall be payable only on the audit and warrant of the state comptroller on the certificate of the commissioner, or the commissioner of environmental conservation for projects undertaken by the department of environmental conservation, in accordance with a certificate of approval of availability issued by the director of the budget.

(b) An agreement with a municipality pursuant to paragraph (b) of subdivision two of this section may provide for an advance in the first instance, when funds are appropriated and available therefor, of an amount equal to the federal share of the cost of a local project subject to full reimbursement being made to the state by the federal government. Whenever the federal government shall subsequently disallow or disapprove any portion or all of the federal aid advanced by the state, such municipality shall reimburse the state in full for all expenditures advanced by the state which have not theretofore been reimbursed by the federal government. If such municipality shall fail to repay the state within one year after notice of such disapproval or disallowance, the state comptroller shall cause to be withheld from state assistance to which such municipality would otherwise be entitled, an amount sufficient to reimburse the state in full, and shall credit the same to the capital construction fund in repayment of such advance.

(c) In the event that any appropriations are made to the office or the department of environmental conservation from the capital construction fund for the payment in the first instance by the state of the federal share of the cost of a project, the state comptroller shall be authorized to receive from the federal government an amount of money equal to the amounts of money expended by the state from such appropriations made for such first instance payments and to deposit the same to the credit of the capital construction fund so that the state shall be reimbursed for the full amount of any and all such first instance payments from such appropriations. 4. Allocation of monies. The monies allocated to the state pursuant to such federal act, during each federal fiscal year, shall be apportioned by the commissioner of parks, recreation and historic preservation, with the approval of the director of the budget, between the state and its political subdivisions as the need may appear, provided that the projects of the political subdivisions qualify for federal assistance pursuant to such federal act and any rules and regulations which may be adopted by the commissioner.