OPERATING EXPENSES AS FIRST LIEN.

(a) If the revenue of a utility system, park, or swimming pool secures the payment of public securities issued or obligations incurred under this chapter, each expense of operation and maintenance, including all salaries, labor, materials, interest, repairs and extensions necessary to provide efficient service, and each proper item of expense, is a first lien against that revenue. For a municipality with a population of more than one million but less than two million, the first lien against the revenue of a municipally owned utility system that secures the payment of public securities issued or obligations incurred under this chapter also applies to funding, as a necessary operations expense, for a bill payment assistance program for utility system customers who:

(1) have been determined by the municipality to be low-income customers; or

(2) are military veterans who have significantly decreased abilities to regulate their bodies' core temperatures because of severe burns received in combat.

(b) An expense for a repair or extension is a first lien only if, in the judgment of the governing body of the municipality, the repair or extension is necessary to:

(1) keep the plant or utility system in operation and provide adequate service to the municipality and its residents; or

(2) respond to a physical accident or condition that would otherwise impair the original securities.

(c) A contract between a municipality and an issuer, as defined by Section 1201.002, under which the municipality obtains from the issuer or the issuer provides part or all of the facilities or services of a utility system to the municipality may provide that payments made by the municipality from the revenue of the utility system are an operating expense of the municipality's utility system.