This article consists of three parts. Part one presents the legal basis of local government. Part two is devoted to the instruments supporting enterprise by local government in Poland. Finally, part three is the study of decision dilemmas in a municipal economy. In this paper the particular forms supporting enterprise with its specifics and properties have been noted and discussed. Also the barriers to the application of certain instruments supporting enterprise and their elimination have been shown. In this paper also the function of enterprise development planning has been evaluated and the role of other instruments supporting enterprise.