Local government has become a constant part of the state system. It must be therefore founded on principles that determine the system in an appropriate manner that conforms to legal regulations. Decentralisation and subsidiarity are the basic principles. They make direct references to an individual’s situation, fundamental rights and freedoms. This is the individual who should have maximum control over their position in both private and public legal dimensions. The systemic issues seen in this light are connected to the participative model of public administration, which assumes active civic involvement in the process of making resolutions. This paper will analyse positions of the doctrine and judicature concerning fundamental principles determining local government, i.e. of decentralisation, subsidiarity, and participative democracy.