Public expenditures represents all the expenditures in the broadest sense of the word in order to administer all the functions guaranteed by law, constitution and other regulations. Their function is to service public needs and they are financed by public revenues, paying fees and incomes. Public expenditure can be divided according to different criteria, usually: ordinary and extraordinary, productive and nonproductive, investment and transfer, personal and material, disposable, and prompt, cash and non cash and expenses of central, regional and local units. While using public expenses it is important to adhere to certain principles which will allow efficient practise. According to that, expenses can be dividied by the principle of public interest, the principle of austerity, the principle of urgency and proportionality, the principle sources of funds and the principle of matching revenues and expenses. Main instrument of financing public expenses is budget. Budget is plan of revenues and expenditures for certain amount of time. It si optimal to know own financial abilities and make financial plan according to that and so is for state. Function of public budget as act is to asses revenues and receipt and establish costs and expenses for one year, and it is established by Croatian parliament. Instrument of financing public expenditures are also exrabudgetary fonds, annex of the budget and special account.