This article presents a historical review of the radical moments in the formation of the local government (LG). The historical holdings in the pre-revolutionary Russia touch upon administrative and territorial reforms of LG and seem to be insufficiently well-founded for the determination of the municipality limits. According to the experience of LG formation in the pre-revolutionary and Soviet periods of time in Russia it is followed that the local government got the guarantees of independence from the system of state power.

The new conception of the local government development laid in the Federal Law N131 of 06.10.2003 #About the general principles of the local government foundation in the Russian Federation# allows to have two types of the territorial formations – settlements and municipal regions (city districts). The adopted variant of the municipal and budget status attaching of the large cities – capitals of the Russian Federation subjects is considered to be one of the main miscalculation of the present reform. Taking Barnaul as an example of a city district the author of this article proves the misconception of such decision and offers to make alterations into the Law and create an alternative model of the municipal government in the large municipal formation.