(a) A local government may accept, give a receipt for, disburse, and spend money from grants and loans for any of the purposes of this chapter. A local government must accept and spend federal money under this section on the terms prescribed by the United States and consistent with state law. A local government must accept and spend state money under this section on the terms prescribed by the state. Unless the agency from which the money is received prescribes otherwise, the chief financial officer of the local government shall deposit the money in separate funds designated according to the purposes for which the money is made available and shall keep it in trust for those purposes.
(b) A local government may designate the Texas Department of Transportation as its agent to accept, give a receipt for, and disburse money from grants and loans for any of the purposes of this chapter. The department shall accept and shall transfer or spend federal money accepted under this section on the terms prescribed by the United States. The department shall deposit money it receives under this subsection in the state treasury and, unless the agency from which the money is received prescribes otherwise, shall keep the money in separate funds designated according to the purposes for which the money is made available, and the state shall hold the money in trust for those purposes.