The management of the local authorities’ internal sources of revenue is important given its relevance for local development especially with respect to its contribution for the development projects and council’s operation. The main objective of this study was to examine the relationship between budgeted revenue with actual collections from the internal sources of the local authority. Furthermore, the specific objectives were to examine the actual revenue collection performance in relation to the set budget, to find out the reasons for not meeting the estimated budget, to access the creativity of Misungwi District Council’s staffs in discovering new internal sources of revenue as well as their management and lastly to determine the extent of variance between the budgeted and actual collection of the local authority at Misungwi District Council. The study covered the period of three years which were 2008/2009, 2009/2010 and 2010/2011. The findings of the study shows that there is a significant discrepancies between own sources of revenue and projected income because the management have failed to manage the collections from its internal sources of revenue as a result of poor budget management which has lead to the Misungwi District Council not to play the expected positive role to stimulate service delivery in the council for the purpose of community development. It has also been noted that there were variances between the budgeted and the actual revenue collected in the years under study. Several factors were given for this state of affairs, among them are, budget preparation not being participatory, lack of by- laws, lack of binding contracts, poor infrastructure, unpredictable events, poor budget forecast by planners and government innervations. The study recommends that Misungwi District Council have to take appropriate measures to address issues like adherence to its plans and make a follow up of the provided guidelines and policies.