(a) Except as expressly provided in sections 7-560 to 7-579, inclusive, no municipality shall issue any deficit obligation to fund a general fund deficiency.

(b) Notwithstanding any charter, special act or home-rule ordinance to the contrary, any municipality which has no outstanding deficit obligation and which has not issued a deficit obligation in the past five years, is authorized and empowered to issue deficit obligations to fund a deficit, provided such municipality shall, within the time and in the manner prescribed by regulations adopted by the secretary, in consultation with the Treasurer: (1) Notify the secretary of its intent to issue such deficit obligations, (2) provide the secretary with the documentation required under sections 7-560 to 7-579, inclusive, (3) establish a property tax intercept procedure, and (4) establish and covenant to maintain with a trustee a debt service payment fund into which the property tax receipts shall be deposited pursuant to the property tax intercept procedure in an amount at least equal to the debt service payment requirement and from which the trustee shall disburse funds to pay debt service on all general obligations of such municipality which have a term of over one year as and when the same shall become due. Notwithstanding any other provisions of sections 7-560 to 7-565, inclusive, sections 7-568 to 7-579, inclusive, any municipality that issues a deficit obligation pursuant to this section or in the five years preceding July 1, 2017, shall be designated a tier III municipality by the secretary.