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Line 1: − One of the best known examples is the Federal Highway Fund, which is funded by the gasoline tax. As the gasoline tax is earmarked specifically for building and maintaining roads, state and local governments receiving money from the Fund must account for these receipts separately from the General Fund and can only use that money for that purpose.+ − − Another example of a trust fund is a bequest left by a wealthy benefactor, whereby a parcel of land is donated to a local government for use as a park, and an endowment created to maintain it.
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'''Trust funds''' are accounts for [[receipts]] earmarked for specific purposes and for the expenditure of these receipts.
'''Trust funds''' are accounts for [[receipts]] earmarked for specific purposes and for the expenditure of these receipts.
An example of a trust fund is a bequest left by a wealthy benefactor, whereby a parcel of land is donated to a local government for use as a park, and an endowment created to maintain it.
Failure to use a trust fund for its designated purpose can result in the government being required to reimburse the fund for the unauthorized expenditure. In the second example above, if the local government decides to no longer operate the park (for example, if the surrounding area is now commercial development), it may be required to return the park and the endowment to the donor or his/her heirs.
Failure to use a trust fund for its designated purpose can result in the government being required to reimburse the fund for the unauthorized expenditure. In the second example above, if the local government decides to no longer operate the park (for example, if the surrounding area is now commercial development), it may be required to return the park and the endowment to the donor or his/her heirs.
[[Category:Budget Terms]]
[[Category:Budget Terms]]