The main objective of the study is to investigate the capability of Chiro and Sebeta urbanrnadministrations to provide their re~pective residents with preference based services, to identifYrnthe possible problems constraining their efforts with this regard and to propose appropriaternsolutions to the problems.rnThe study employed more of qualitative method. Accordingly, the fiscal powers andfill1ct ions asrnwell as the fiscal autonomy of the ULGs in ORS in general and that of the study areas inrnparticular are looked into thoroughly. The investigation started with the scrutiny made on legalrnframeworks in place for local governments including ULGs both at the federal and regionalrnlevel.rnPrimary and secondary data are collected and analyzed accordingly. Structured andrnunstructured interviews are carried out with pertinent officials and experts Fom thernmunicipalities and sector offices of the study areas as well as Fom the federal and regionalrngovernment offices. Group discussions of stakeholders and field observations that focused onrnselected services are also part of the study process.rnThe introduction of legal Fame works that weakened the autonomy of the urban administrations,rninappropriate interferences Fom the regional government, the mismatch between the taxationrnpowers and expenditure responsibilities of the urban administrations and lack of capacity tornadminister taxes and to carry out expenditure responsibilities are among the findings of thernstudy.rnAs a result, it is concluded that the urban administrations under consideration are not in arnposition to render appropriate level and mix of local public goods and services.rnIn light of the findings, it is recommended that there is a need to enhance the autonomy of thernurban administrations in a manner it tackles the multi faceted inte!ference fi-om the regionalrngovernment. Boosting the taxation power of the ULGs and allowing them to access additionalrnfinancial sources so as to help them match their .financial capacity with their expenditurernresponsibilities is found to be equally important. Redesigning the grant transfer arrangement inrna manner it takes the economic disparities along jurisdictions into consideration is also part ofrnthe recommendation.