Introduction. The budgetary mechanisms and interbudgetary relations have the central place in current conditions in the system of financial and investment maintenance of local governance. The budgetary mechanisms in their general meaning are of the administrative and technical nature, yet, in the practical meaning, they should be considered in the context of efficiency along with the processes of social and economic development of a territory (state, region, community). It stipulates the ability of such mechanisms to significantly impact the development of social and economic areas (in particular, through the application of special procedures of generating, approving, and implementing the budgetary solutions). The budgetary mechanism is a complicated managerial category, which by its content can be defined as a set of organizational, methodological, legislative, and regulative provisions that secure the functioning of the budgetary system of a country as well as a set of methods, tools (procedures), and leverages that are the ground for implementation of managerial decisions in the process of forming and use of centralized funds of the country and its territorial and administrative units or respective regions. Therefore, the notion of the budgetary mechanism covers the levels of the use of various tools – at the level of the state, regions, or communities represented by local governments. The paper aims to explain the concept of forming budgetary mechanisms and determining the main problems of interbudgetary relations. Results. The paper outlines the features of using the budgetary mechanisms and forming interbudgetary relations in Ukraine. The dynamics of revenues and expenditures of budgets of various levels in Ukraine in 2000-2019 is shown. The pace of change of revenues and expenditures of budgets of various levels in Ukraine in 2000-2019 and the share of revenues and expenditures of local budgets in the consolidated budget of Ukraine with transfers and without them in 2000-2019 are determined. The mechanisms of public support of local budgets in Ukraine are generalized. The structure of funding the infrastructural investment in the consolidated territorial communities in Ukraine in 2016-2018 is outlined. Conclusions. The efficiency of the use of subsidies and subventions by local governments is evaluated based on the sociological survey. Key words: decentralization of authorities, interbudgetary relations, budgetary process, expenditures, revenues