Enterprise funds

I was asked how enterprise funds work in comments to another post. I thought I would bring my answer up to this level.
Enterprise funds are allowed by Mass General Law Chapter 44, section 53F1/2. A utility, health care, recreation or transportation facility in the town is set up with a separate account into which all revenues generated by that entity are paid.
An example is the the town's Water Enterprise fund. All receipts from water bills are ...

... placed in an account separate from the town's General Fund and these Water Enterprise funds are used to run the Water department.
One advantage of this arrangement is that those citizens who use and benefit from the operation of the enterprise bear the cost of providing the service. In the example of the Water Enterprise fund, those who use town water pay for the Water department and those who are on wells do not.
One provision of note is that the enterprise fund cannot be used to generate revenue for the General Fund. Any excess earnings must be placed in a separate account for future use by the enterprise fund and for the purposes that the fund was created, or used to reduce fees. Shortfalls must be made up from the tax levy.