A special revenue fund is a dedicated account created by a local government for a specific purpose, often funded by a tax on citizens. The money can only be used for its intended purpose, and must be accounted for publicly. It can be used for infrastructure maintenance, emergency funds, or new construction projects.
A special revenue fund is a fund created by a local government that is used specifically for a single purpose. It usually comes from a tax on citizens, but the funds collected from the tax are earmarked for a single government project or go to a single department. There are many ways a special revenue fund can be used, including maintaining local infrastructure, creating contingency funds for emergencies, or undertaking new construction projects within a city or town. All money in the fund must be accounted for and there must be proof provided that they are being channeled for their intended purpose.
Local governments face many expenses in the process of maintaining the health and well-being of their citizens. Most of these expenses are paid for using money contained in the operating budget of the town or city in question. However, there are special circumstances that require a municipality to create an account solely for a single purpose. Such an account is known as a special income fund.
The distinguishing feature of a special income fund is that the money within it can be used for only one purpose. Raising these funds usually requires some form of special tax on the citizens of the town or city. It must be made clear to citizens exactly where the taxes are directed. These taxes will often be paid voluntarily by citizens as long as they are not too burdensome, since citizens know that they are ultimately benefiting the community in which they reside.
As part of the legal restrictions surrounding a special income fund, all money raised for the fund must be used only for its intended purpose. A municipality that collects excess money in such a fund, for example, cannot suddenly decide to channel this extra money to other expenses. In addition, there must be a public report of the funds raised and the expenditures made from the fund for the specific purpose.
There are many ways a community can use a special revenue fund. In many cases, the funds are used to help with basic infrastructure projects such as road maintenance or rebuilding public property. Sometimes the fund may be enacted for a new project, such as the construction of a new school or the construction of a new highway. Funds with special income can also be used as emergency funds. When this is the case, the money in the fund is held in reserve until some kind of emergency requires its use.
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