A. The proceeds from the supplemental municipal gross receipts tax shall be deposited in a special improvement account of the municipality and shall be used only for:

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(1)     the payment of the principal of, interest on, any prior redemption premiums due in connection with and other expenses related to the supplemental municipal gross receipts bonds issued pursuant to the Supplemental Municipal Gross Receipts Tax Act;

(2)     the funding of any reserves and other accounts in connection with such bonds;

(3)     refunding bonds; and

(4)     to the extent not needed for those purposes, the improvement of the municipality’s water system.

B. When any issue of supplemental municipal gross receipts bonds is fully paid, the supplemental municipal gross receipts tax shall cease to be imposed for that issue, but may continue to be imposed for bonds enacted and approved pursuant to Section 7-19- 12 NMSA 1978 and thereafter issued, or for refunding bonds issued pursuant to section 4 [7-19-17.1 N.M. Stat. Ann.] of this 1997 act. Any money remaining in a special improvement account after the obligations for supplemental municipal gross receipts bonds and refunding bonds, are fully paid may be transferred to any other fund of the municipality.