In the face of growing demands for public accountability, environmental sustainability, and service efficiency, modern approaches to local budget management have emerged as essential tools in transforming municipal governance. This paper explores key innovations including performance-based budgeting (PBB), participatory budgeting (PB), digitalization of public financial systems, and the integration of green budgeting frameworks. Drawing on global case studies and comparative academic literature, the study highlights how these approaches enhance fiscal transparency, encourage citizen engagement, and align local spending with strategic development goals. PBB links resource allocation to measurable outcomes, improving service delivery efficiency; PB democratizes fiscal decisions by involving residents directly in budget prioritization; digital tools expand access to budget data and streamline planning; and green budgeting aligns municipal finance with environmental objectives. Despite these advances, numerous challenges remain—including limited institutional capacity, digital divides, insufficient legal frameworks, and uneven fiscal autonomy across municipalities. The paper concludes that successful adoption of modern budget practices requires not only technological and procedural reforms but also sustained investment in local capacity-building, inclusive governance, and regulatory adaptation.

local budget management, municipal governance, performance-based budgeting, participatory budgeting, fiscal transparency, public financial management, green budgeting, e-budgeting, citizen participation, decentralization.

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