N.J. Stat. § App.A:4-13
Any city, borough, town, township or village or other municipality in this state (hereinafter referred to as "municipality"), in any contract which such municipality may make with the United States through the federal emergency administrator of public works, or such other federal agency as may be created or designated under laws of the United States heretofore or hereafter enacted relating to the issuance of bonds or other obligations to the United States, is hereby authorized and empowered to agree as to the disposition of the revenues of any waterworks system owned by it and of any additions, improvements and extensions to such waterworks system, and to agree to reserve, set aside and use such revenues only for the payment of the principal and interest of the bonds of said municipality which have been heretofore and which may hereafter be issued by such municipality for the financing of the acquisition or construction, of such waterworks system and of any part thereof and of any additions, improvements and extensions; provided, the expenses of operating and maintaining such waterworks system be first paid out of such revenues. The city, town, township or village treasurer or borough collector-treasurer as the case may be, of any municipality making any such agreement, or such other officer or officers of such municipality as may have charge of the finances of such waterworks system, shall thereafter dispose of such revenues in accordance with the terms and provisions of such agreement with the United States and, after deducting the expenses of operating and maintaining such waterworks system shall apply such revenues to the payment of the principal and interest of all such bonds, before using any part of such revenues for any other purpose. Any bonds or notes which are or shall be general obligations of a municipality shall not by reason of this act cease to be general obligations of such municipality; nothing herein shall be construed as affecting the debt limit of any such municipality as now or hereafter fixed by law.
N.J.S. § App.A:4-13