The principle of self-government is essentially a new phenomena in the Czech Republic. Under the previous regime, almost everything was ruled by the central government. At the present time, the major constraint to local budget reform is primarily from the local authorities' lack of experience. While on one hand, this gives the Czech Republic a challenge to avoid some of the mistakes made in several developed countries, it is, on the other hand, difficult to make estimates of the possible responses to any change. Next to the lack of experience, there is a strong feeling both at the local and the central levels of government that the self-government bodies should have almost no regulation from the central government. The current opinion is that their control should be left only to the respective electorate. There is also the belief that self-government units should become increasing financed by tax revenues derived from within their own area. An additional complication is the lack of common non-governmental institutions (different associations and others) which usually smooth the the relationship between local and central governments. The changes in the Czech Republic are not yet complete. After the changes in the legal framework, the complete reform of the tax and social systems were to follow. While the essentials of tax reform were introduced in January 1993, the changes in the social systems are still under consideration. In spite of the relatively short history of having true local authorities functioning in the Czech Republic, the establishment of an additional level of government is being proposed. This issue is reopening some already closed matters and will bring a change to the whole system. As in many other countries, the division of responsibilities between different levels of government will probably continue to be discussed until the end of time.