Performance management of public authorities, including local ones, is considered to be attained by reforms imposed by politics through norms. The „everybody can be manager” approach is no longer relevant. The reason is on the surface – the LPA operate in an environment of unprecedented resources restrictions. Under such conditions the management of the LPA needs „managers” who have profound knowledge in the field and are not dilettante. However, the management of public organizations should take into consideration the model of prosperous private companies, in every aspect, including the managerial instruments used. This paper proposes to use a method of risk assessment of budgets for the LPA at the planning stage. This tool requires the LPA to have profound knowledge of the tangible areas with regard to the management. Knowledge-based approach can foster reforms and not vice versa.