Given the assumption that the main task of the state is to meet the needs of the population, i.e. to meet economic and social goals for the whole development, there is a question of how the state and by what means will achieve the goals set. For this reason, a fundraising plan is being created to achieve the objectives and accordingly a plan on how to distribute these funds evenly. The budget plays a key role in this planning process. The budget of the Republic of Croatia is defined by the Law on Budget as an act assessing revenues and receipts and determining the expenditure and expenditure of the state for one year. The state must determine the size of the funds and adequate policies to come to the desired results, and this work is very extensive and requires good knowledge of the public sector of the country. The aim of this paper is to describe the basic features of the budget and budgetary process and to analyze what the sources of funding of the local government unit are and to what extent the local government unit manages to realize the planned resources for the budget year and. The analysis was carried out over the Annual Report on the implementation of the budget of the Municipality of Kaptol in Požega-Slavonia County over revenues, expenditures and sources of financing.