The article highlights the current state of formation of local budgets in the conditions of decentralization of financial resources, taking into account the changes made to the budget and tax legislation. The purpose of the article is to study the problems of formation and use of funds of local budgets. Development of proposals for improving the existing functioning mechanism and filling local budgets. The state and local self-government share tasks and responsibilities for providing citizens with public services. The effectiveness and scale of activities of local authorities in the field of providing public services depend mainly on the state of finances of local authorities. The system of local budgets exists in all countries of the world. The urgent task of financial decentralization is to ensure the necessary volume of financial resources for the implementation of the specified activity. Studies show that at the moment the system of local budget revenue generation has an insufficient level of own revenue and a large share of transfer payments in the revenue part of local budgets. With the beginning of Russia's large-scale invasion of Ukraine, local self-government bodies, like the entire state as a whole, faced new challenges and problems, the solution of which, first of all, requires additional financial resources. According to the results of 10 months of 2022, revenues to local budgets decreased by an average of 16% compared to January-October 2021. Studies have shown that the largest specific weight in the structure of the revenue part of local budgets is occupied by tax revenues, namely personal income tax, a single tax, land tax. Based on this, it is proposed that the leaders of the united territorial communities focus specifically on the administration of personal income tax, cooperation with natural persons entrepreneurs, legalization of labor relations, raising the level of wages at economically active economic entities and on other measures, the purpose of which is to increase revenues from this tax. Today, the issue of increasing the level of financial capacity of communities is solved by developing the economy in their territories, ensuring strategic management of the development of territories, popularizing territories, promoting investment attraction, supporting local business and developing industries. Each of the communities determines the priority industries in its territories. Rural areas give priority to the development of agro-industrial complex branches, farming for the cultivation of those crops that are characteristic of a certain area.
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