An indicator of the success of the introduction of a new mechanism for the formation and use of local budgets funds is the financial capacity of the territorial community, which will be achieved when the potential financial capabilities of local self-government bodies ensure the financing of the identified priorities and the achievement of the corresponding results of the socio-economic development of the territories. If the territorial community is financially insolvent, it receives a basic subsidy and subventions from the state budget. The analysis of budget revenues of the Lyubeshiv settlement territorial community shows that official transfers accounted for 72.4% of the territorial community's budget revenues, tax revenues for 26%, and non-tax revenues for 1.5%. It was found that the Lyubeshiv territorial community really does not have the opportunity to independently and in a sufficient amount form the income of its budgets. Expenditures for state-wide functions occupy a fairly large share in the structure of expenditures, on the other hand, revenues from local taxes and fees do not even cover the costs of the management apparatus. At the expense of their own incomes and funds transferred from the state budget, local self-government bodies are able to spend costs on the social and economic development of the respective territorial communities. In order to improve the process of local budget revenue formation, it is necessary to: review the composition of local budget revenue and expand the powers of local authorities regarding the formation of the revenue part of local budgets, in particular, allow the establishment of new economically justified non-tax payments; to ensure monitoring and financial control over the use of funds from local budgets. It was determined that the activities of local authorities should be aimed at: ensuring effective planning, investment attraction and better conditions for job creation; use of local resource potential to create competitive advantages; ensuring the motivation and capacity of "key participants" to take advantage of effective cooperation; creation and support of institutions for the use of intellectual potential.