The need to integrate the two types of expenditures in the budget of a
government, whether done in a single or a dual budget, is unquestionable.
The traditional logic of the capital budget (not development budgets, which
also include expenditures for development of human capital) is that infra-
structure projects get purchased once and then yield a flow of returns for many
years without the need to pay for the project again. A major infrastructure
project is likely to be sufficiently expensive to disrupt the finances of the
locality if paid for in a single year and so permanent that extraordinary
reviews should be undertaken before including it in a spending program.
These features are distinct from spending that develops human capital
(teacher and physician salaries, for instance) and give rise to the special bud-
getary treatment of capital spending in local fiscal systems in industrial
countries. Fiscal logic accepts that capital budgets may be financed (that is,
paid for by issuing debt), so that the facility is being paid for throughout all the
years of its life, whereas operating expenditures need to be paid from revenues
received during the current year. Whether dual budgets are maintained or
not, there is no doubt about the need for local governments to integrate both
types of spending in the overall budget process, to link budgets to planning,
to maintain processes that reflect the interests of the citizenry, and to main-
tain budgets within available resources.