Fiscal decentralization is the transfer of decision-making on the distribution of public expenditures and public revenues to individual levels of government. Fiscal decentralization encourages competition between lower political-territorial units in such a way that each of these units will try to better meet the needs of its population in order to avoid migration to units where the provision of public goods is better, cheaper or where citizens can enjoy are not insured in the unit of their residence, etc. In this way innovation is encouraged, and thus better insurance of public goods. Fiscal decentralization is a long and complex process whose dynamics are conditioned by a number of factors. The process of fiscal decentralization in principle implies a selective, designed and financially supported transfer of tasks, competencies and powers from the state, ie central government to lower levels of government as holders of power at the local level. The purpose of fiscal decentralization is to give full authority and responsibility for decision-making regarding financing, management and execution of tasks to lower various authorities.