Since the adoption of local self-government regime, expansion of local government`s budget autonomy, through local finance equalization scheme, has been an on going issue for policy makers. In spite of differences in the shape and the origin of funds, this will be a constant issue and even for the new government. The participatory government has devised the national balanced growth special account and applied its distribution scheme from year 2006. Each local government has been applying it from the next year. In order for the national balanced growth special account budget to be distributed fairly and objectively, each local government should have developed her own distribution scheme. This study elaborates the process and challenges of developing a Jeonbuk province`s national balanced growth special account budget distribution scheme. We used regression method to develop new models and compared these to old distribution methods and found that the former is logically superior to the latter. This study will stimulate the local government`s interest for developing objective budget distribution scheme for her province.