The study is devoted to the characterization of fiscal federalism at the local level in Russia. The aim of the paper is to assess the prospects for the development of local finance in Russia based on a study of the ratio of tax revenues transferred at the federal level, as well as the policies of regional authorities to regulate the revenue of municipalities, the causes and consequences of government choice of certain regulatory instruments . Based on the analysis of statistical data on the performance of local budgets, it is shown that the decline in the share of personal income tax assigned to municipalities at the federal level has significantly increased the role of tax revenues transferred to municipal budgets by the regional authorities. It was confirmed that the policy of regional authorities, focused on the active regulation of local budgets through the redistribution of tax revenues, does not always result in a reduction of significance for municipal entities of gratuitous receipts from budgets of higher levels. Of interest is the analysis of the structure of revenues of local budgets, depending on the types of municipalities.