A balanced budget system is one of the key elements in the implementation of a regional policy where the primary goal is to minimize the differences in regional socioeconomic development across Russia. Improving budgetary relationships between different levels of government is a prerequisite for ensuring a balance in public administration at the federal and regional levels. How can the organization of the interrelationships between the national and regional budgets be improved? How can the quality of the budget process and financial management of the regions be improved? What needs to be done to transition to a policy that achieves real alignment of budgets? What is more effective: imposing tough budget constraints or easing administrative regulations and expanding the powers of the regions?