Municipalities in Kosovo are the basic units of local government. Municipalities have some specific charachteristics such as: legal personality, powers specified in order to exercise certain functions; consolidated budget; limited control as specified by central institutions; and effective and local participation of citizens.  

The existence of these institutions is indispensable in the process of democratization and citizen participation in decision-making processes, and consequently local institutions are the first and closest contact where citizens receive necessary services for them.

As such, local institutions have two basic functions: The first function is to provide services to citizens, while the second function is representation of citizens and their involvement in setting priorities and public needs.

The main distinguishing feature of local institutions is the independence they have from the central level, albeit always a relative independence. The local government is a bridge between the central government and citizens, especially because it is connected with certain geographic areas, and with people who are affected by certain problems in those areas. This enables local government to better understand and address those problems. The local government is an instrument of the state that unites people of a certain geographic location into a common organization whose function is to complement the lack of central institutions, and to better meet common needs of the community.