(a) Funds derived from taxes in road improvement districts shall be used by each district to pay its bonds, interest, and other valid and outstanding indebtedness which matured prior to January 1, 1927. The balance, if any, shall be used to pay bonds and interest maturing after January 1, 1927, or for construction, repairs, and maintenance, subject to the restrictions set forth in this subchapter which are intended to govern the expenditure of those funds.
(b) In the event any road district has valid and outstanding indebtedness existing prior to January 1, 1927, or maturing thereafter, not evidenced by bonds or interest coupons and which is not taken over by the state by virtue of Acts 1927, No. 11 [superseded], and the districts have no funds on hand with which to pay the indebtedness, the commissioners of the road district may levy a tax from year to year upon the lands in the district sufficient to pay the valid outstanding indebtedness. Upon payment of the indebtedness as provided in this section, any balance or surplus shall be handled in accordance with the further provisions of this subchapter, provided such districts are authorized to refund any such indebtedness.