Gov. Code, § 53706

“Priority expenditures” for which the State and Local Fiscal Assistance Act of 1972 (Public Law 92-512) funds may be spent for the purposes authorized by the act by a local agency are priority expenditures serving the general interest of the citizens of the city or the county in which they are spent whether the expenditure is made by the city, the county, or by any other local governmental agency authorized to perform those purposes within the city or the county receiving the funds. The funds for the construction, removal, relocation or replacement of any facility designed to provide water, water treatment or sewer services may be allocated and appropriated for such priority expenditures by the city or county receiving them for expenditure by the agency itself or by the local governmental agency which performs the service wholly or partially within the boundaries of the city or the county making the allocation for such purposes.