1. Except as otherwise provided in subsection 2:
(a) The payment of municipal securities may not be secured by an encumbrance, mortgage or other pledge of property of the municipality; and
(b) No property of the municipality is liable to be forfeited or taken in payment of the securities.
2. The payment of municipal securities may be secured by pledged revenues, proceeds of taxes and any other money pledged for the payment of the securities. A municipality may encumber, mortgage or otherwise pledge property purchased from the proceeds of a loan to secure repayment of that loan.