For several years now Ukraine has been existing in new realities of local governance system reforming; the country undergoes the reform of authorities’ decentralization, the new administrative and territorial units – consolidated territorial communities – are formed, legislation directed at joining the European international treaties are adopted. However, local governance in Ukraine hasn’t yet acquired the powerful and financially capable form of public authority realization. Therefore, increasing the level of local authorities’ independence and providing them with sufficient financial resource to implement their powers are the ways, which are abound to secure regions’ economic growth and establish the optimal relation of state and local budgets in conditions of local governance and authorities’ territorial organization reforming. The paper aims to assess current condition of local budget revenues forming, in particular the influence of interbudgetary transfers on their forming, and to develop practical recommendations to strengthen financial independence of local governments in conditions of financial resources’ decentralization. The paper analyzes current tendencies of local budget revenues forming and influence of interbudgetary transfers on their forming in the context of budget system decentralization. Major directions to strengthen financial independence of local governments are outlined. The following directions to strengthen local governments’ financial independence are defined as the most essential under current conditions of local authorities’ functioning, when their efficient activity is the key to successful development of the overall economic system in the country: creation of budgetary system and interbudgetary relations that correspond to the principles of optimal maintenance of local governments’ development; separation of central and local authorities’ responsibilities in the sphere of granting administrative and social services in order to prevent duplication of their functions and tasks at different levels; extension of own revenues basis of local budgets and therefore strengthening of territorial financial autonomy along with growing responsibility for decisions made at local level. For this matter it is necessary: to renew the model of the system of interbudgetary relations basing it on complete state financial maintenance of delegated responsibilities; to define the sufficient tax basis in order to ensure the exercise of authorities by local governments; to establish full-scale self-governance at the level of oblasts and regions (including through creation of their own executive authorities); to conduct the complex reforming of administrative and territorial structure of the country (including defining of both basic and intermediary and regional levels of self-governance, etc). 

financial independence, decentralization, local budgets’ revenues, interbudgetary transfers, local governance