The main goal of this paper is budgeting in municipalities with emphasizing the possibilities to balance between the needs of the local population and meeting prerequisites for the social standard wanted. The research has been conducted to analyze the revenue and yields for settlement of expenditures that local self-government unit has and the possibility of providing additional standards and measurements that will have an effect on the quality of life. The research is based on the example of Brdovec municipality. Furthermore, the research also dealt with the theoretical approach of budgeting and functioning of local municipalities. These methods provided the ability to give critical review upon functioning of municipalities. The results of the research present the breadth and significance of municipalities in the contemporary society and point to the importance of local budgeting in the process of creating social standard of the local community. Analysis of Brdovec municipality budget in the period of seven years (2011 – 2017) showed that local budget plays a key role in development and better organizing in local communities. However, despite the popular opinion, results have also shown that the current territorial organization is not a limiting factor for the future development of local self-government units. Further strengthening of the process of decentralization and fiscal capacity would bring to significant improvement of the current state of local self-government in the Croatia. An important conclusion of this research is also that better developed local self-government units help the economic growth and create a stimulating environment for development.