(a) All municipalities receiving grants from the state under this part shall establish a graduated sewer user's fee on each user of the sanitary sewers provided by the municipality. The municipality providing such a service shall bill and collect the fee from users of the service and is authorized to enter into contracts for the collection of such sewer user fees with any public or private corporation or municipal utilities board or commission operating a water system in the area of the sewage system or to make contracts with any other city, town or utility district to meter, bill and collect sewer user charges as a designated item on its water bills and to discontinue water service to sewer users who fail or refuse to pay sewer user charges, including the right not to accept payment of water service charges from any customer, without receiving at the same time payment of any sewer user charges owed by such customer, and not to reestablish water service until such time as all past due sewer service charges owed by such customer have been paid, and to perform all acts and discharge all obligations required by the provision of any such contract or contracts.

(b) The authority shall establish the monthly payment, due from the municipality to the state, necessary for the municipality to fund the project. The municipality shall establish a sewer user's fee and/or such ad valorem taxes as necessary to provide funds sufficient to pay the monthly payments established, plus the costs of operation and maintenance of the sewage treatment work, including depreciation according to generally accepted accounting principles and any other debt service requirements of the system. It is the intent that the sewer user's fee be the primary source of payment of such costs and payments. The sewer user's fee shall be adjusted periodically by the municipality so that the sewer user's fees will be sufficient to pay such monthly payments and costs, but will create a minimum excess. It is the intent that such sewer user's fees shall only be for the purpose of providing for such monthly payments and costs. The sewer user's fee shall be expressed as a single charge on the utility bill. The sewer user's fee in any county having a metropolitan form of government shall be the established fee on April 19, 1973, and shall not be adjusted by the authority unless the governing body of such county shall by ordinance request the authority to make an adjustment in such amount as the authority shall determine.

(c) Any upward adjustment of the sewer user's fee shall not be granted solely on the basis of increases of rates and charges for water services, but shall be made only after a finding by the municipality that such an adjustment is reasonable and justified. This subsection (c) shall not apply to counties with a metropolitan form of government.