On having analyzed in detail the complex of the problems related to the financial-economic condition of local self-government in Russia, the author concludes that unless the question of the financial-economic base of the respective organs is legislatively solved, political and economic conflicts between regional and local authorities are inevitable. Within the characterized situation it is first of all the donor towns — on which the future of Russian economy depends — that find themselves between the devil and the deep blue sea. With considerable factual material attracted for the substantiation, the author demonstrates that the efforts of local authorities cannot suffice to provide for towns’ good viability. If all municipal incomes are taken off and redirected for the support of the unprofitable enterprises and for subsidizing the subsidized territories, the donor towns will save no means for their own long-term development. The conclusion made in this connection is that in the forthcoming reform of the interbudgetary relations the key attention must be given to donor towns and they should be provided the possibility to develop and to earn for living. Only on that condition will real economic basis for local self-government and for the prosperity of the country as a whole be created.