Small towns in Russia are a very special structure of state and public life organizationally, legally, socially and culturally. They have their own specific mode of economy and plans for development. As practice shows, small towns in Russia have a lot of unsolved problems. Analysis of the organizational, legal and socio-economic situation of Revda and Degtyarsk, small towns in Sverdlovsk region, that have industrial enterprises, where the majority of able-bodied population works, made it possible to reveal some typical contradictions, existing there. The article considers the perspectives of development of such small towns and the peculiarities of municipal administration. The author of the article draws a conclusion that monopolization of all kinds of government, including organizations and agencies with different forms of property, brings about stagnation in socio-economic development. Moreover, the total enthusiasm for organizational and legal forms of administering, in the form of affiliations, results in decreasing performance efficiency of bureaucracy.