(a) In instances where state aid has been extended to paving and other special improvement districts within cities and incorporated towns and all bonds and other obligations of the districts have been retired or money is set aside with the paying agents in amounts sufficient to provide for their retirement, then all moneys and other assets in the hands of the commissioners of the districts, or in the hands of the paying agents, in amounts exceeding the full debt service requirements of the bonds and other obligations shall be paid over to the respective treasurers of the cities and incorporated towns for the credit to the street fund, there to be used for the repair and maintenance of its streets.
(b) No such moneys may be paid over to the treasurers in amounts which shall exceed the state aid previously extended to paving and other special improvement districts, it being the intention of the General Assembly in the enactment of this section to redefine such excess moneys as being available in the first instance for both the retirement of the districts' obligations and the improvement of its streets and alleys as prescribed.
(c) In instances in which the districts are no longer in existence, or are inactive, the city or town treasurer shall draw drafts on the bank accounts of the districts for the amounts so found to be due, and all the drafts shall be honored and paid by the banks upon which the drafts are drawn.