This study exammes the local rcvcnu e mobilization and expenditurernmanagement efforts of City Admi n is tration of Adama using municipalrnrevenue and expendi ture a nalysis to identify the magnitude of the problemrnof urban fin a n ce. Qu a li ta tive and quanti tative d a ta were colleted formrns econdary and primary so urces . Revenue and expenditure reports, plan andrnbudget documents both from Regional and City Administra tion level,rninterviews and questionna ires a re major sources of the data.rnThe evidence in the study leads to conclusion that the city Administration ofrnAdama is s hort of efforts to mob ilizc its local revenue potential and thernexpenditure ma n agement a ppears to be in-a ppropria te . The expenditurernmanagement is faced by problems of capital budget under spending, lowrnlevel of municipal services provision a nd the existence of huge surplus fund.rnPa radoxically enou gh, the City Admin is tra tion Adama is cha ra cterized byrnlow level of urban services provision a t the pres ence of huge surplu s fundrnaccumula ted over a decade. Furth er , the findings of the study revealed tha trnthe exis te nce of fiscal gap in City Adminis tration 's finance. Revenuernenhan cemen t plan based on improvemen t of tax a dminis tration system,rnmunicipa l borrowing for ca pital fina n cing, pUblic-private partnershiprnoptions in providing services, in tergovernmental tran s fer restructured inrnu rban setting, revis ion of user ch arges and fees and introduction of newrnmunicipa l taxes are th e a lternatives recommended to fill the fiscal gap.