These are drawn up and approved by councils and contain the basic controls for sound financial management and discipline. Implications for levies, rates and service charges of this income and expenditure. Capital programmes, including an investment programme for municipal infrastructure Operating and capital budgets, as well as a capital programme, must be prepared in accordance integrated development plan. To have a comprehensive understanding of local government budget process, it is imperative that people understand capital and operating budget. Capital budget deals with expenditure on assets that are created or acquired whilst operating budget deals with expenditure on service provision on services such as maintenance of roads, ensuring that electricity is available, health and traffic matters.
All departments gather data on the maintenance of services and new pro-jects for expanding services.
Although this information gathering process is on going, collation and consolidation of this data earnestly start not later than September or October of each year. Based on the information gathered, officials will split the budget into capital and operating segment and submit it to the council for approval. The trend in South African budgeting and in many other countries is forward budgeting which is known as the Medium - Term Expenditure Framework. They are also required to compile a financial plan including an infrastructure investment plan, based on its integrated development plan for the coming three to four years. After the end of the financial year, the entire budget is reviewed to ensure its compliance with policy, target and plans so that corrective action or changes can be made for the coming financial year.