The economic woes and crisis of the 1980s and 1990s made several countries turn to decentralization of health services as a panacea to the worsening health service provision. Like many other countries, Tanzania introduced decentralization system in health service provision. Through HSR, Local Government Authorities (LGAs) are empowered to run health service delivery while central government acts as an overseer by injecting financial resources to the LGAs. With slight improvements that have been recorded among the LGAs since the implementation of HSR, there is a staggering difference among LGAs between what was thought to be achieved in health service delivery and what is actually seen on the ground. Because the failure of LGAs to equitably deliver health service has been widely researched, this article focuses on the efficacy of the LGAs to make use of financial resources. Drawing data from LGAs Audit Reports for 2007/08-2013/14, the paper analyses the LGAs use of financial resource availed to them for health service delivery. The focus is on health development project/project of Community health Fund (CHF) and Primary Health Services Development Programme (PHSDP). The paper finds that the financial resources meant for health service provision is either put to use or no. Arguably, this is due to lack of political will, poor community participation, and mismanagement of public financial resources and endemic culture of corruption among LGAs.