Interbudgetary transfers relate to methods of budgetary regulation, in modern conditions occupy an important place in the process of budgetary regulation. With the entry into force of the Budget Code of Ukraine, they become one of the main methods of budget regulation, in line with the experience of foreign countries. Interbudgetary transfers play a crucial role in the system of local finance: they are used to ensure that revenues correspond to the expenditure powers of various levels of government. The main problem that today is characteristic of this financial equalization tool in Ukraine is the corruption component of spending (and this involves abuses of officials in determining certain goals, lack of transparency and poor public accountability). Today, intergovernmental transfers should be a key factor in creating such a mechanism that will effectively influence the management of state and local finances, which will ensure fairness and efficiency in the provision of public goods and services. The aim of the article is to study the theoretical foundations of the functioning of intergovernmental transfers, the analysis of budget regulation methods and the identification of problems that have arisen as a result of the reform of intergovernmental relations. In order to assess the financial solvency of local budgets by the example of the Transcarpathian region, the share of official transfers in local budget revenues of Transcarpathia has been analyzed. The results of the study showed that a significant increase in subventions to local budgets from the State budget is positive, but on the other hand it leads to discourage local authorities to increase their own revenues. An element of scientific novelty, based on the results of the analysis, is to highlight the main problems in the functioning of the system of intergovernmental transfers in Ukraine. This topic has the prospect of a study that will be based on the study of optimization of intergovernmental relations in the context of increasing the independence of local budgets.