(a) The municipal legislative body, after providing for the:

1. (1) payment of operation and maintenance expenses of the utility;
2. (2) payment of the interest and principal on revenue bonds and creation of reserves for them;
3. (3) payment of the interest and principal on general obligation bonds and creation of reserves for them; and

4. (4) payment of assessed taxes;

   shall set aside a sufficient remainder of the earnings into a separate and special account to be identified as the special utility account, to be used and applied in the extension, replacement in whole or in part, repair, and operation and maintenance of the utility.

(b) The remaining earnings may be applied to:

1. (1) the general fund of the municipality in accordance with IC 8-1.5-3-11 , outstanding bond ordinances, and contract provisions under IC 8-1-2.2 ;
2. (2) the payment of the interest on a loan made for utility construction; or

3. (3) the creation of a sinking fund for the liquidation of the debt;

   as the legislative body determines.

   As added by Acts 1982, P.L.74, SEC.1.