The Board may, by and with the consent of the Governor and the governing body of any city or town having a population of 3,500 or less, incorporate in the primary state highway system such streets and highways or portions thereof in such city or town as may in its judgment be best for the handling of traffic through such city or town from or to any highway in the primary state highway system and may eliminate any of such streets or highways or portions thereof from the primary state highway system. Every such action of the Board incorporating any such street or highway or portion thereof in the primary state highway system or eliminating it therefrom shall be recorded in its minutes.

Any such street or highway or portion thereof in any such city or town so incorporated in the primary state highway system shall be subject to the rules, regulations, and control of the state highway authorities as are other highways in the primary state highway system. But such city or town shall be obligated to pay the maintenance, construction, and reconstruction costs of such streets or highways or portions thereof so incorporated in the primary state highway system in excess of the amounts authorized to be spent by the Commissioner of Highways on such streets or highways.

Every provision in the charter of any such city or town insofar as it is in conflict with this section is hereby repealed.

The Commissioner of Highways may permit such city or town to maintain any such street or highway or portion thereof incorporated in the primary state highway system and may reimburse such city or town up to such amount as he is authorized to expend on the maintenance of such street or highway or portion thereof.