In my thesis I focused on defining the financial flow of the state budget towards the budget of municipalities, classified the variety of state subsidies, and characterized the reasons for providing of such subsidies. Further I focused on defining the conditions for receiving the state subsidies by the municipalities and the conditions of their utilization. For my work I came out from theoretically gained knowledge. My thesis brings economic analyze on the impact of the provision of state subsidy within the Czech Republic. Further I compare the system development and the development of the amount of subsidies and their portion.