Section 38B. Unless otherwise specifically provided, a provision in any act authorizing a county treasurer to issue and sell bonds or notes of the county shall authorize such treasurer, with the approval of the county commissioners, to issue and sell refunding bonds or notes for the purpose of paying or refunding all or any designated part of any issue of outstanding bonds or notes, including the amount of any redemption premium thereon, all or a portion of the interest due at or prior to the date on which such outstanding bonds are redeemed and costs of prepaying, issuing and marketing the refunding bonds; provided, however, that no such refunding bonds or notes shall be payable over a period longer than the period during which the original bonds or notes so refunded must be paid pursuant to law. The first annual payment of principal on account of an issue of refunding bonds or notes shall not be later than the last day of the fiscal year in which the earliest stated principal maturity date of any of the bonds or notes being refunded falls and the annual payments thereafter shall be arranged in accordance with the provisions of the law authorizing the bonds or notes; provided, however, that any annual payment earlier than the date on which the first annual payment is required to be made, may be in any amount. Except as otherwise provided in this section, the issuance of such refunding bonds or notes shall be governed by the applicable provisions of this chapter. Refunding bonds or notes issued under this section, exclusive of amounts thereof issued to pay redemption premium, interest and costs of prepaying, issuing and marketing the refunding bonds, shall be subject to the same limit of indebtedness, if any, as the bonds or notes refunded by them; provided, however, that upon the issuance of such refunding bonds or notes, the bonds or notes refunded shall no longer be counted in determining the limit of indebtedness under the law authorizing them. If such refunding bonds or notes are issued prior to the maturity or redemption date of the original bonds or notes refunded, an amount of the proceeds of the refunding bonds or notes and other money then available or to become available to the county, which may include income to be derived from the investment of such proceeds, sufficient to pay or provide for the payment of the principal, redemption premium, if any, and interest on the bonds or notes so refunded to the date fixed for their payment or redemption shall be held in a separate fund and in trust solely for the payment of such principal, redemption premium and interest. All of the funds so held may be invested notwithstanding the limitation in section thirty-seven A and the income derived from such investment may be expended by the treasurer to pay the principal redemption premium, if any, and interest on the bonds or notes refunded until they are paid or redeemed; provided, however, that any such investment may have a maturity not later than the date fixed for the payment or redemption of the bonds or notes refunded.

Nothing in this section shall permit a county to fund or refund an annual or accumulated operating deficit.