This chapter presents an overview of the principal functions performed by a typical municipal government in Mexico, emphasizing financial administration because it is the arena that lends itself better to assessing the actual practice of decentralization. The data analyzed further show that the Municipal Reform has favored state governments instead of municipalities. A new type of municipal government has been created in Mexico, one, indeed, that is much closer to the constitutional precept of municipio libre. The municipality is governed by an ayuntamiento, or council, headed by a municipal president who is elected every three years, but who cannot be reelected to consecutive terms. An important function of a municipal government is to participate in the formulation of federal and state development plans, as well as to formulate, implement, and control its own plans and programs. Until the mid-1980s, when the Municipal Reform was enacted, considerable ambiguity existed regarding which specific services fell under the responsibility of municipal government.