(a) A local government may make a payment under a risk retention group agreement from proceeds of taxes imposed by and revenues of the local government, including:
(1) ad valorem, sales and use, and hotel occupancy taxes;
(2) revenue derived by the local government from any system or other specified source; or
(3) any combination of taxes and revenue.
(b) A local government that does not have authority to impose ad valorem taxes for payment of contractual debts may make a payment under a risk retention group agreement from an annual appropriation of proceeds of ad valorem taxes the local government is authorized to impose.